An early investor in Amazon $AMZN and Tesla $TSLA said Nvidia $NVDA is a different bet, and that the AI chipmaker could reach a $50 trillion valuation in a decade.
James Anderson, a former fund manager at Baillie Gifford, told The Financial Times that Nvidia’s “persistent exponential progress, the competitive advantages in hardware and software, and the culture and leadership are exactly what we look for.” Anderson runs a $650 million fund that counts Nvidia as its largest position.
“The potential scale of Nvidia in the most optimistic outcome is both way higher than I’ve ever seen before and could lead to a market cap of double-digit trillions,” Anderson told The FT. “This isn’t a prediction but a possibility if artificial intelligence works for customers and Nvidia’s lead is intact.”
Anderson reportedly wrote in a letter to investors this year that the probability of Nvidia reaching a market cap of $49 trillion in a decade due to growth in data center demand is 10% to 15%. He added that what he finds important 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.”
Anderson told The FT that Nvidia is different from his bets on Amazon and Tesla because those companies “didn’t start from highly profitable and dominant positions but had to get there.”
Nvidia’s highly in-demand chips, which are used for training some of the world’s most powerful AI models, have propelled the company’s revenue and market value amid the generative AI boom. In February, Nvidia became the first semiconductor company to reach a $2 trillion valuation. after it reported record fourth-quarter earnings. Nvidia reached the $3 trillion market cap threshold for the first time in June, briefly surpassing both Microsoft $MSFT and Apple $AAPL to become the most valuable company in the world.
The chipmaker’s shares are up almost 167% so far this year.