Forget Nvidia's $4 trillion valuation! This tech company is set to cross $4.5 trillion market cap, thanks to its big AI bets
Nvidia has seen a meteoric rise - becoming the first company in the world to have a market capitalization of over $4 trillion. In fact there are only five economies in the world that have a GDP of over $4 trillion as per IMF's 2025 projections.
But even though Nvidia has become the first company to cross the $4 trillion capitalization mark, there's another technology company that may hit $4.5 trillion!
According to Oppenheimer analysts quoted in a Motley Fool report, another AI giant is poised to join Nvidia in the $4 trillion valuation category and potentially reach $4.5 trillion within the next year. Currently, this particular stock presents a more favourable investment opportunity compared to Nvidia, the Oppenheimer analysts believe
Nvidia's Rise: Is The Market Dominance Sustainable?
Nvidia stands out as a big success story - its valuation has seen an over 10 times rise in the last three years.
This remarkable growth stems from substantial investments in artificial intelligence (AI) infrastructure, where Nvidia's graphics processing units (GPUs) serve as essential components.
However, Nvidia's leading position in the AI chip sector encounters challenges.
Other GPU manufacturers are improving their price-performance ratios, whilst Nvidia's major hyperscale clients are increasingly utilising their own custom silicon designs for generative artificial intelligence (AI) applications.
This could possibly impact the company's growth outlook.
Nvidia is an AI chip industry leader, particularly in training hardware. Its superiority comes from advanced tech capabilities and its exclusive CUDA software platform. This creates big barriers for competitors to surmount in the semiconductor market, the Motley Fool report says.
However, major clients such as Meta Platforms and Microsoft are actively seeking to reduce their dependence on Nvidia's AI training hardware, the report said.
Meta is expanding its Meta Training and Inference Accelerator system across various generative AI applications. Their new chip aims to replace Nvidia processors in AI training for the Llama foundation model, whilst they already utilise their custom chips for certain AI inference operations.
Microsoft harbors similar objectives with its Maia chips, although they have delayed their next-generation AI training chip launch to 2026, rather than releasing it this year.
Such delays have previously affected other large-scale computing companies, including Meta, resulting in substantial Nvidia orders.
Nevertheless, as these technology giants enhance their chip design capabilities, they could potentially reduce their reliance on Nvidia's processors substantially over time.
Nvidia maintains a strong market position, particularly following the US government's decision to lift restrictions on H20 chip sales in China.
The company is poised to see a robust earnings growth throughout the year, driven by Chinese market access and hyperscaler demand.
However, what is noteworthy is that Nvidia's shares command a significant premium, trading at nearly 40 times projected earnings, the report noted. Given this elevated valuation and potential long-term challenges, the stock's growth rate might lag behind other major artificial intelligence enterprises.
Which Company can Hit $4.5 Trillion Market Cap?
Currently, only a select few organisations rival Nvidia's market presence. Among the exclusive group of companies valued above $1 trillion, merely three have achieved valuations exceeding $3 trillion, with Nvidia being one of them.
Microsoft, valued at approximately $3.8 trillion presently, stands closest to Nvidia. Oppenheimer analysts project Microsoft could reach the $4 trillion milestone shortly. Their analysis sets a $600 price target for Microsoft shares, suggesting a potential market valuation of $4.5 trillion, representing a 19% increase from its value as of July 15.
Oppenheimer's optimistic outlook comes from many factors:
There is expectation of higher revenue growth from Microsoft's Azure cloud computing service.
Azure has actually emerged as Microsoft's main growth driver. This is due to increasing computational requirements for AI development.
Additionally, Microsoft's investment in OpenAI not only implies a significant Azure customer but also provides essential resources for the broader AI development community.
The surge in demand has been remarkable. Despite Microsoft's substantial investment of $80 billion in capital expenditures, primarily directed towards data centre construction and equipment, the company reports that demand still exceeds supply. Nevertheless, Azure maintains its position as the fastest-growing platform amongst the three major public cloud services.
Analysts' optimistic outlook on Microsoft stems largely from the prospects of Copilot Studio. Whilst they acknowledge modest interest in Microsoft 365's native AI assistant Copilot, they anticipate stronger performance from the customisable AI assistant platform, Copilot Studio. This development allows Microsoft to implement higher pricing for its enterprise software package whilst maintaining customer loyalty.
The higher revenue can in turn be reinvested in Azure and share buyback programmes. This would potentially boost earnings per share via improved profits distributed across a lower share count.
Microsoft shares currently trade at approximately 33 times forward earnings, reflecting a relatively high valuation. However, this multiple appears justified for a company that maintains leadership positions in both cloud computing and enterprise software sectors of the AI industry.
Following news about potential reversal of US restrictions on chip exports to China, Oppenheimer analysts revised their Nvidia price target to $200 per share, suggesting a market capitalisation of $4.9 trillion. However, at current prices, Microsoft presents a more appealing investment opportunity, the report said.
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Meanwhile, Apple, Amazon, and Meta—all scheduled to report earnings this week—traded higher as expectations built around strong revenue performance amid robust demand and ongoing AI integration into their ecosystems. Live Events Top stocks related to the market story about the U.S.-EU trade deal, upcoming Fed decision, and tech earnings: Nvidia (NVDA) – Surged on continued AI momentum and upcoming earnings. Tesla (TSLA) – Gained on a $16.5B AI chip partnership with Samsung. Apple (AAPL), Amazon (AMZN), Meta (META), Microsoft (MSFT) – Big techs set to report earnings this week. Cheniere Energy (LNG), NextDecade (NEXT) – Benefiting from EU's $750B energy purchase deal. Lockheed Martin (LMT), RTX Corp. (RTX) – Defense stocks rally on EU import commitments. Nike (NKE) – Rose after JPMorgan upgraded the stock. Energy and Defense stocks rally on EU commitments The U.S.-EU trade deal included a significant commitment from Europe to purchase $750 billion worth of U.S. energy products . This sent stocks like Cheniere Energy and NextDecade soaring, as investors bet on a long-term export boom in liquefied natural gas (LNG) and related infrastructure. Defense contractors also saw a bump, with Lockheed Martin, RTX, and Northrop Grumman gaining ground. Analysts expect European nations to ramp up U.S. defense imports amid ongoing geopolitical tensions and shifting security policies. Fed meeting, GDP data, and inflation report may cause volatility Even with the trade deal easing short-term tensions, market participants are bracing for a volatile week due to upcoming macroeconomic triggers. The Federal Reserve is set to announce its latest interest rate decision on Wednesday, with traders expecting the central bank to hold rates steady but offer clues on future easing. In addition, investors are closely watching the GDP growth figures, June PCE inflation report, consumer confidence index, and July jobs data, all of which could heavily influence near-term market direction and sentiment. Market sentiment supported by easing inflation and stable earnings outlook Recent economic indicators suggest inflation is cooling steadily while consumer spending remains resilient. This dual effect is reinforcing a soft-landing narrative, which many on Wall Street are embracing with cautious optimism. Combined with strong quarterly earnings reports from key sectors like tech, finance, and healthcare, the market outlook for Q3 appears more stable than initially feared. However, some analysts warn that valuations remain stretched, especially in the technology space, and any miss in earnings or hawkish surprise from the Fed could quickly shift the tone. Nike jumps on analyst upgrade amid global demand strength In individual stock movers, Nike shares rose nearly 4% after JPMorgan upgraded the company from 'neutral' to 'overweight.' The firm cited renewed momentum in international orders and improving margins in key regions such as Asia-Pacific and Europe. This upgrade sparked renewed interest in consumer discretionary stocks, which have underperformed in recent months due to inflation and inventory headwinds. Investor takeaway: momentum strong but risks remain While today's trade-driven bounce adds fuel to the recent rally, market participants are well aware that several risk events loom large. The U.S. economy is at a pivotal juncture—too much Fed tightening or disappointing economic data could derail the rally. On the other hand, signs of disinflation and strong corporate earnings could push the S&P 500 and Nasdaq to even higher highs. Investors are advised to watch key earnings (especially Apple, Amazon, Microsoft, Meta, and Alphabet), listen to Fed Chair Jerome Powell's tone, and monitor real-time macro releases to gauge short-term risks. Snapshot: major index performance (as of monday morning) Index Movement Notes Dow Jones -0.1% Slight dip; traders await Fed guidance S&P 500 +0.14% Near record highs; tech drives gains Nasdaq +0.35% New highs; AI and chip stocks rally What to watch this week: top events and earnings to track Federal Reserve meeting – Interest rate decision (Wednesday) Apple, Amazon, Meta, Microsoft earnings – Critical tech results GDP growth rate – Q2 data to assess economic strength Core PCE index – Key inflation gauge the Fed watches July jobs report – Labor market health and wage trends These events have the potential to cause significant volatility across sectors, particularly in tech, financials, and consumer discretionary. Can the market rally continue? Monday's early gains set a hopeful tone, but the week ahead will be a real test of investor conviction. The combination of a successful U.S.-EU trade agreement and strong earnings from key sectors could sustain bullish momentum. However, macro data and central bank commentary remain wild cards. In the short term, expect rotation between sectors—with tech, energy, and defense likely to remain strong performers—while rate-sensitive sectors like real estate and banking may tread cautiously. If the Fed confirms its rate-hiking pause and economic data supports the soft-landing scenario, the S&P 500 and Nasdaq could extend their record-setting runs into August. But any sign of economic weakness or Fed hawkishness could trigger swift pullbacks. FAQs: Q1: What is boosting the US stock market this week? The US-EU trade deal and upcoming tech earnings are lifting market sentiment. Q2: Why are Nvidia and Tesla stock rising? Both stocks are up due to strong AI demand and Tesla's major chip deal. 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