Nvidia's $5 Trillion Shockwave: AI Kingpin Teeters on History's Edge

This article first appeared on GuruFocus.

Nvidia (NASDAQ:NVDA) could be about to make history. After months of relentless momentum, the chipmaker is within striking distance of a $5 trillion market valuation, a threshold no company has ever reached. Shares jumped 3.5% to $208.05 in premarket trading, suggesting the milestone could fall as the regular session begins. It's been only four months since Nvidia crossed the $4 trillion mark, but CEO Jensen Huang's global deal spreefrom Samsung to Hyundaihas kept the AI story running at full speed. So far this year, Nvidia has surged about 50%, single-handedly accounting for nearly one-fifth of the S&P 500's 17% gain, a reflection of how much the AI boom has reshaped market leadership.

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Momentum may also be getting a political nudge. President Donald Trump said he plans to speak with China's Xi Jinping about Nvidia's Blackwell chip, a comment that revived speculation about potential U.S. export flexibility. Trump previously floated the idea of allowing a downgraded version of the processor to reach Chinaa move investors think could reopen one of Nvidia's biggest markets. Huang, meanwhile, dismissed talk of an AI bubble, saying the company's next-generation chips could generate up to half a trillion dollars in revenue and unveiling a new system designed to bridge quantum computing with Nvidia's AI platforms.

Wall Street's view remains overwhelmingly bullish. Of the 80 analysts tracked by Bloomberg, more than 90% rate the stock a buy, with an average price target of $223.68about 11% above current levels. At less than 34 times estimated earnings, Nvidia's valuation sits below its five-year average and roughly in line with peers in the semiconductor index. Yet some strategists caution that expectations are sky-high after a 1,275% rally since 2022. Fort Pitt Capital's Dan Eye said Nvidia could eventually yield some ground to rivals like AMD (NASDAQ:AMD) and Broadcom (NASDAQ:AVGO), though if the AI revolution continues to expand as expected, today's valuation may still prove justified.

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