Nvidia's Potential $5 Trillion AI Future
Source: theglobeandmail.com
Shares of Nvidia (NASDAQ: NVDA) have faced macroeconomic uncertainty, geopolitical tensions, tariff wars, export controls, and competition from Chinese companies. However, its recent earnings, including the fiscal first quarter of 2026, show investors should focus on long-term growth.
Nvidia's first quarter fiscal 2026 performance validates its leadership in the AI market. Revenue increased 69% year-over-year to $44.1 billion, with data center revenue up 73% to $39.1 billion. These factors could drive Nvidia's market value past $5 trillion in the next decade.
AI Chip Market Dominance
Nvidia dominates the AI chip market with over 80% share. The Grace Blackwell 200 (GB200) GPUs offer 25 times higher performance at a twentieth of the cost of Hopper H100 chips. The Blackwell ramp-up was Nvidia's fastest product launch, accounting for nearly 70% of data center compute revenues in the recent quarter. Major hyperscalers are deploying nearly 72,000 Blackwell GPUs weekly and plan to increase output.
GB300 Systems
Nvidia is sampling GB300 systems at cloud service providers, with production shipments expected by the end of the second quarter. These systems offer 50% more high-bandwidth memory capacity and a 50% increase in inference computing performance compared to GB200 systems.
Software Ecosystem
Nvidia's software ecosystem, including the CUDA parallel programming platform used by 5.9 million developers, creates a barrier to switching to competitors' chips. CUDA accelerates GPUs for various applications and prevents infrastructure investments from becoming obsolete. Nvidia also launched its TensorRT software package for inference optimization and the TensorRT-LLM software library for large language models.
Strategic Alliances
Nvidia is partnering with Humain to build AI factories with 18,000 GB300 Blackwell chips in the first phase. Nvidia is also involved in the Stargate Project, where OpenAI, SoftBank, and Oracle plan to invest $500 billion into U.S.-based AI infrastructure over the next four years. These alliances may catalyze Nvidia's long-term growth.
Financial Performance and Projections
In fiscal 2025, Nvidia's revenues grew by 114% to $130.5 billion. Revenue is projected to increase by 52.8% in fiscal 2026 and 23.9% in fiscal 2027. The company recorded 69% revenue growth in Q1 of fiscal 2026. Nvidia could grow at nearly 20% annually over the next decade, reaching about $808 billion in revenues in fiscal 2035.
Nvidia reported a 55.8% net income margin in fiscal 2025. Assuming a 27.9% net income margin in fiscal 2035, with $808 billion in revenues, net income would be around $225 billion that year. With a forward P/E multiple of 23.5x, the company could reach a market value of $5.29 trillion by 2035.
Growth Opportunities
Nvidia's upcoming AI initiatives, such as Sovereign AI, agentic AI, and physical AI, along with increasing demand for high-performance chips in gaming and AI PCs, provide further opportunities. Gaming revenue rose 42% to $3.8 billion in the first quarter. Enterprise AI is also growing, with Nvidia's RTX Pro, DGX Spark, and DGX Station systems targeting the $500 billion market. Nvidia's Omniverse and robotics platforms power factory automation and humanoid robotic systems.
Long-term investors might consider a stake in Nvidia to benefit from the AI wave.