As chipmaker NVIDIA Corp. (NASDAQ:NVDA) surges past $5 trillion in market capitalization, several prominent analysts have reacted to the stock’s unrelenting rally, amid growing concerns regarding its sustainability and speculations of an AI bubble.
56x Return In Seven Years
Investor Andrew Left’s Citron Research congratulated the company on hitting its latest milestone, which comes just months after hitting $4 trillion in market capitalization.
On Wednesday, in a post on X, Left recounted his early bet on the chipmaker, saying, “I was proud to be one of the first on Wall Street to recognize the company’s real future,” which he said was seven years ago, when it was reeling from the aftermath of a “crypto mining bust.”
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Since then, Citron has accrued a return of 56 times its original invesment, within the span of seven years. “As for how that call aged… well, I suppose it depends on who you ask,” he said.
16.5% of US Nominal GDP
Kevin Gordon, the Head of Macro Research and Strategy at the Schwab Center For Financial Research has highlighted that the company’s market capitalization now accounts for 16.5% of the U.S. nominal GDP.
Hedge fund manager, Spencer Hakimian, notes that Cisco Systems Inc. (NASDAQ:CSCO) at the peak of its valuation during the dot-com bubble in 2000, accounted for 4% of U.S. GDP. Hakimian drew a loose parallel to the magnitude of today’s AI-driven valuations, while stopping short of calling it a bubble.
A $500 Billion Opportunity Amid Growing AI Capex
Analyst Dan Ives notes the hike in the capex guidance of Meta Platforms Inc. (NASDAQ:META) and sees it as a bullish trend for NVIDIA and its peers such as Advanced Micro Devices Inc. (NASDAQ:AMD). “This the fuel for [the] AI Revolution,” Ives said, in a post on X.
Google-parent Alphabet Inc. (NASDAQ:GOOG) similarly sees its 2025 capex rising to between $91 billion and $93 billion, from $85 billion that it had guided in the past, creating more broad-based tailwinds for NVIDIA.
Independent investor Amit Kukreja notes that NVIDIA CEO Jensen Huang himself has forecasted a $500 billion opportunity for the company over the next five quarters, which is ahead of the Street’s estimates at $380 billion. This, he said, excludes China sales, which President Donald Trump is set to discuss with his Chinese counterpart, Xi Jinping, on Thursday.
“Orders” Are Not “Sales”
One of the few cautionary takes regarding NVIDIA comes from Lawrence McDonald of The Bear Traps Report, who highlights that “orders” do not equal “sales.”
This comes amid rising concerns over circular revenue flows in the AI ecosystem, exemplified by NVIDIA’s recent investment in OpenAI, which in-turn is set to buy the former’s chips to power its massive AI infrastructure.
NVIDIA shares were up 2.99% on Wednesday, closing at $207.04, and are down 0.08% overnight. The stock scores high on Momentum, Growth and Quality in Benzinga’s Edge Stock Rankings, with a favorable price trend in the short, medium and long terms. Click here for deeper insights on the stock, its peers and competitors.
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