Tickets for the AI Club Paradise: Who is the Next $4 Trillion Star in the Stock Sky?

Artificial Intelligence (AI) is considered one of the most significant technological developments of recent decades. These new algorithms promise substantial productivity increases by automating and streamlining time-consuming tasks. Companies that adopt this groundbreaking technology could expect significant economic benefits, which has already garnered considerable interest. The possibilities of generative AI are virtually limitless and have prompted some of the world's largest companies to position themselves at the forefront. This has led to a remarkable increase in the market value of these technology giants, with their market capitalizations rising into the trillions. Wall Street is keenly watching to see which company will be the first to enter the exclusive $4 trillion club. However, this perspective might be short-sighted, says Dan Ives, an analyst at Wedbush. The tech veteran argues that in the next six to nine months, three prominent companies will reach this milestone and could reward their shareholders in the process. A leading candidate on this path is Nvidia. No discussion on AI would be complete without mentioning Nvidia, whose graphics processor technology (GPUs) powers AI engines. The rapid increase in its sales and profits has made Nvidia currently the third most valuable company globally, with a market capitalization of $3.4 trillion. A price increase of about 19% could secure the chip manufacturer's membership in the $4 trillion club. Nvidia GPUs are regarded as the gold standard for generative AI, making them indispensable in data centers where AI processes run. Nvidia dominated about 98% of the data center GPU market in 2023, and this dominance likely continued this year as well. Major cloud infrastructure providers have announced plans to invest heavily to advance their AI strategies. Additionally, the upcoming launch of Nvidia's AI-focused Blackwell chip is generating excitement and sustaining the trend. According to Ives, "Blackwell is the next frontier for Nvidia and the entire AI revolution." He believes that the demand curve is still underestimated by investors. This assessment may prove to be accurate. As the undisputed market leader in data center GPUs, Nvidia has a clear competitive advantage and will continue to benefit from the increasing adoption of AI. An additional advantage is the company's record-breaking high gross profit margin, which makes Nvidia even more profitable and is likely to boost its stock price. Hence, entry into the $4 trillion club seems almost guaranteed.