Nvidia Makes History as the First $4 Trillion Company. Will It Reach $5 Trillion?

Core Viewpoint - Nvidia has made history by becoming the first company to reach a market capitalization of $4 trillion, highlighting the bullish sentiment in the market regarding AI development [1][4][6] Group 1: Market Capitalization Milestones - Nvidia surpassed the $1 trillion mark for the first time just two years ago, making its rise to a $4 trillion market cap remarkable [4] - It is the first company other than Apple to break various trillion-dollar valuation points, marking a significant milestone in the tech industry [6] Group 2: Future Growth Potential - The transition from a $4 trillion to a $5 trillion market cap requires only a 25% increase, compared to the 33% needed to rise from $3 trillion to $4 trillion, suggesting a potentially quicker ascent [7] - Nvidia's GPUs are in high demand, particularly among AI hyperscalers, due to their performance and flexibility, which positions the company for continued growth [8] - Record capital expenditures for data centers are projected to rise from $400 billion in 2024 to $1 trillion by 2028, indicating strong future demand for Nvidia's products [9] - The aging installed base of GPUs will necessitate replacements, further driving revenue growth for Nvidia in the coming years [10] Group 3: Valuation Considerations - Nvidia's stock is currently trading at 38 times forward earnings, which is considered expensive, but the company has significant growth potential ahead [13] - Analysts expect approximately 26% revenue growth for FY 2027, raising questions about the justification for the high earnings multiple [13] - The risk-reward profile remains favorable for investors, suggesting confidence in Nvidia's long-term prospects despite its high valuation [13]