This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Nvidia (NASDAQ: NVDA) hit a record-setting milestone on Wednesday, July 9, becoming the first publicly traded company to reach $4 trillion in market capitalization. The semiconductor company briefly reached the landmark as Nvidia stock rose more than 2% in early trading. The market cap moved down to $3.97 trillion by mid-afternoon.
Let's put the achievement into perspective. There are only 10 companies in the world that have a market capitalization of more than $1 trillion, and Nvidia has surpassed them all in such a relatively short time. Nvidia itself was valued at less than $1 trillion just over 25 months ago.
What comes next? Does Nvidia seem like a lock to one day reach a $5 trillion market cap? Will investors see that happening in 2025?
Nvidia's amazing ride
If you're into personal computers, you've known about Nvidia for a while. Its graphics processing units (GPUs) were best known for years as the go-to product for gamers who wanted the best visual experience. Its products also got pulled into the growing interest in cryptocurrencies back in the late 2010s because they could be modified to help power the best cryptocurrency mining operations.
But it wasn't until late 2022 and early 2023, when generative artificial intelligence (AI) entered the public realm, that Nvidia stock exploded. Nvidia's GPUs are parallel processing chips, which means they can handle complex calculations that can be divided into smaller tasks and handled simultaneously.
AI calculations are performed in parallel processors, and Nvidia's GPUs can be combined into clusters to work faster and be more powerful. That's how the company came to dominate the AI space, as its GPUs account for roughly 92% of the market space, according to Jon Peddie Research.
Nvidia reached the $1 trillion mark on May 30, 2023, and the stock skyrocketed 239% for the year. Then in 2024, growth continued as Nvidia hit the $2 trillion mark on Feb. 23, 2024, and the $3 trillion mark less than four months later on June 5, 2024. For the full year, Nvidia stock rose 171% in 2024.
That brings us to now. It took a little more than a year for Nvidia's market cap to go from $3 trillion to $4 trillion, as the stock rose by 20% in that period.
Can Nvidia get to $5 trillion this year?
The best thing that Nvidia has going for it is that its GPUs are still flying off the shelves. CEO Jensen Huang said the company is seeing massive demand for its new Blackwell chips, which are 40 times more powerful than the popular Hopper chips.
Nvidia also sees a massive opportunity in the AI market as companies work to build out their data centers to train large language models (LLMs) to power generative AI products. The company has projected data center capital expenditures to increase from $400 billion in 2024 to more than $1 trillion in 2028 -- and Nvidia, as mentioned before, is very likely to get the lion's share of that business.
In addition, Nvidia's CUDA software platform is a huge advantage because it provides tools for developers working on AI models that are powered by Nvidia GPUs. It would be very expensive for any developer to switch to another platform, so Nvidia has a customer base that's locked in for years to come.
Now let's look at the numbers. To get to a $5 trillion valuation, the Nvidia stock price would need to go up another 25% by the end of the year -- to roughly $205 per share. Barclays analysts already have a price target of $200 for Nvidia, so it's not out of the question. Also, consider that the consensus analyst estimate for full-year earnings per share is $4.29, which is a 66% increase from full-year earnings in the company's fiscal 2025 (which ended Jan. 26).
That's more than enough to get to the magic number. And if Nvidia, which saw revenue growth up 69% year over year in the first quarter of fiscal 2026 (ended April 27, 2025), can pull a similar number for the Q2 earnings report on Aug. 27, the timeline to get to $5 trillion could shorten to late this year.
The bottom line
It seems nearly certain that Nvidia will be a $5 trillion company, sooner rather than later. That's why I call Nvidia the one stock I would buy and hold forever. We probably won't see the $5 trillion mark until sometime in early 2026, but the August earnings report could make everyone readjust their thinking.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
