1 Unstoppable Stock to Buy Before It Soars More Than 1,100% Over the Next 10 Years, According to 1 World-Renowned Analyst
Nvidia has had a blistering run since the dawn of AI, but there could be much more to come.
One legendary investor believes that the chipmaker could soar to heights over the coming decade.
Asking if a $50 trillion market cap is far-fetched might be the wrong question.
10 stocks we like better than Nvidia ›
U.S. investors might not be familiar with the name James Anderson, but his pedigree and investing success are undeniable. The iconic investor was a star stock picker at Scottish investment management firm Baillie Gifford for more than four decades. He headed the premier Scottish Mortgage Investment Trust for more than 20 years, amassing gains of more than 1,700% during his tenure.
Anderson established his reputation as a visionary by taking early stakes in trailblazing, explosive-growth companies including Netflix, Amazon, Tesla, and Nvidia (NASDAQ: NVDA), generating substantial gains for investors in the process. Given his history of spotting big winners early on, investors would do well to heed his advice.
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The age of artificial intelligence (AI) has only just begun, and if adoption continues at the current rate, Nvidia's market cap could catapult to as much as $50 trillion (not a typo) by 2035. While that might seem far-fetched at first glance, Anderson provides a compelling argument to support his assertion.
Cornering the market
Groundbreaking advances in the field of AI have had a profound impact on Nvidia's fortunes. Since the dawn of generative AI in late 2022, the company's market cap has soared tenfold from $416 billion to $4.16 trillion (as of this writing). Helping drive that increase was Nvidia's graphics processing units (GPUs) becoming the gold standard for processing AI.
The chipmaker's financial results have helped fuel its meteoric rise. After generating two consecutive years of triple-digit year-over-year growth, the inevitable slowdown occurred, but the current results are enviable nonetheless. In its fiscal 2026 first quarter (ended April 27), Nvidia generated revenue that grew 69% year over year to a record $44.1 billion, while adjusted earnings per share of $0.81 marked a 31% jump.
To give the results context, Nvidia's $44 billion in sales in the most recent quarter far exceeds the $27 billion in revenue the company produced for all of fiscal 2023.
As impressive as these results are, there could be much more to come. AI could add as much as $15.7 trillion to the global economy by 2030, according to a report released by "Big Four" accounting firm PricewaterhouseCoopers (PwC). The report goes on to suggest "AI is still at a very early stage." Capturing just a portion of that market opportunity would be a windfall for Nvidia, driving its sales and profits even higher.
Anderson calculates that the market for data centers, where the vast majority of AI processing takes place, is growing at a rate of roughly 60% annually. If growth continues at that rate over the coming decade, and Nvidia can maintain its profit margins, that would translate to EPS of $1,350 and free cash flow of roughly $1,000 per share. Given those metrics, the stock would then be worth roughly $20,000 per share, which works out to a market cap of about $49 trillion.
Competitive advantages
Looking at Anderson's most profitable investments can be illuminating. Amazon stock has surged 227,600% since its IPO, while Netflix and Tesla have soared 105,000% and 20,020%, respectively. However, Anderson points out that this isn't an apples-to-apples comparison, since these big winners "didn't start from highly profitable and dominant positions but had to get there."
Nvidia checks those boxes. The company is highly profitable, and despite rising competition, Nvidia is currently the undisputed industry leader in the data center GPU space, with a dominant 92% market share, according to IoT Analytics. Beyond its industry-leading position, Nvidia has other advantages. It's "persistent exponential progress, the competitive advantages in hardware and software, and the culture and leadership are exactly what we look for," he noted.
Plenty of things will have to go right
To be clear, even if everything else went according to plan, there are plenty of other things that could trip up Nvidia on its journey to $50 trillion.
The ongoing adoption of AI appears likely, but it may not materialize. A rival could invent a better solution for handling AI models. Nvidia could fail in its efforts to stay ahead of the competition. A black swan event could confound growth. Tariffs could backfire, driving up inflation and sparking a recession.
Not to be a killjoy, but the world is full of uncertainty, and any of these developments -- or many more not listed -- could be a stumbling block for Nvidia on the path to $50 trillion.
A better question
Anderson was quick to point out that his theoretical benchmark "Isn't a prediction but a possibility if artificial intelligence works for customers and Nvidia's lead is intact." He goes on to suggest that the likelihood of Nvidia reaching those heights is slim, suggesting the potential for this outcome clocks in at between 10% and 15%.
Yet it's worth taking a step back and focusing on the big picture. "It is the long duration of the development of [GPU] usage in AI -- and not just AI -- from excitement, through potential pauses, to transformation of industries that is most important to us," Anderson said.
On the subject of valuation, Nvidia is currently selling for 29 times next year's expected earnings, which is frankly a bargain, given the magnitude of the opportunity.
For me, the question isn't whether Nvidia could ultimately hit a market cap of $50 trillion over the coming decade. The more relevant question is whether the company will continue its long track record of innovation, while finding new ways to implement its technology, and capitalize on these secular tailwinds in the process. Given its track record, I would submit the answer is a resounding "yes."
That's why Nvidia stock remains a buy.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!*
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena has positions in Amazon, Netflix, Nvidia, and Tesla. The Motley Fool has positions in and recommends Amazon, Netflix, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
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