Nvidia: A Calculation of Value

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Nvidia, a company once celebrated for its ascent on the wave of artificial intelligence, now finds itself subject to the inevitable scrutiny that attends any period of exceptional growth. The initial surge, fueled by the adaptation of its graphics processing units to the demands of AI computation, was remarkable. A 1,200% increase in share price since early 2023 is not to be dismissed lightly, and many investors have profited accordingly. However, the market, as it always does, is beginning to ask the obvious question: can this continue?

Recent months have seen a cooling of the initial enthusiasm. Talk of speculative bubbles, decelerating growth, and even circular financial arrangements have cast a shadow over the stock. While the rate of growth has slowed, it is important to note that absolute demand remains robust. This distinction, often lost in the noise of market speculation, is crucial. Some analysts, predictably, have taken note.

One such analyst has recently doubled their projections for Nvidia, predicting a market capitalization of $20 trillion by 2030 – a figure that would represent a further increase of 332% in share price. It is worth examining the basis for this claim, reviewing the company’s recent performance, and assessing the plausibility of such an ambitious target. The market, after all, is not governed by hope, but by calculation.

The Figures, Stripped Bare

For its fiscal third quarter of 2026, ending October 26th, Nvidia reported record revenue of $57 billion – a 62% increase year-over-year and 22% sequentially. Earnings per share jumped 67% to $1.30. These are not insignificant numbers. The data center segment, the engine driving this growth, generated $51.2 billion in sales – a 66% increase – underlining the continuing adoption of AI technologies. The company projects revenue of $65 billion for the fourth quarter, representing a similar rate of growth.

However, these figures, impressive as they are, only tell part of the story. The company’s CEO, Jensen Huang, has revealed a backlog of approximately $500 billion, to be fulfilled over the next six quarters. His CFO, Colette Kress, suggests that this figure has since increased. This indicates that Nvidia’s revenue growth is unlikely to slow anytime soon. The question is not whether the company can maintain its current trajectory, but whether it can accelerate it.

A Calculation of Possibilities

Nvidia’s current market capitalization stands at approximately $4.6 trillion. To reach $20 trillion, the stock must increase by 332%. The company is expected to generate revenue of $213 billion in fiscal 2026. This gives it a price-to-sales ratio of 21. If this ratio remains constant – a significant assumption, but one worth exploring – Nvidia would need to increase its revenue to approximately $923 billion annually to support a $20 trillion market cap.

Wall Street analysts currently forecast annual revenue growth of over 34% for Nvidia over the next five years. If this benchmark is achieved, the company’s revenue would reach $939 billion by 2030 – sufficient to meet the projected target. This is not a matter of blind faith, but of simple arithmetic.

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Beth Kindig, CEO and lead tech analyst at the I/O Fund, recently doubled her previous estimates for Nvidia, predicting a $20 trillion market cap by 2030. Her argument rests on the expectation of a 36% annual increase in data center revenue over the next five years, which would push the company’s market cap above the $20 trillion mark.

This is supported by Nvidia’s aggressive 1-year product roadmap, an impenetrable software ecosystem through CUDA, and its evolution into a full-stack AI systems provider. When these elements are modeled together – alongside the rapid expansion in global AI infrastructure capex – the path to $20 trillion becomes less sensational and more a reflection of compounding fundamentals.

Kindig’s track record is noteworthy. In 2021, when Nvidia’s market cap was just $550 billion, she predicted that it would surpass Apple to become the world’s most valuable company. This prediction proved accurate within three years. It is a reminder that careful analysis, based on solid fundamentals, can yield accurate results.

The recent anxieties surrounding an AI bubble and slowing adoption have created an opportunity for patient investors. Nvidia is currently trading at less than 25 times forward sales, despite expectations of a 65% increase in revenue to $326 billion over the coming year. This suggests that the stock may be undervalued.

Ultimately, whether Nvidia reaches the arbitrary $20 trillion benchmark is less important than the underlying strength of the company. The evidence suggests that Nvidia stock is likely to be worth considerably more in the future, regardless of short-term market fluctuations. The market, after all, is not a casino, but a reflection of the underlying value of the companies it comprises.

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2026-02-15 11:03