Meet the Charter Member of the $5 Trillion Club. Here's Why It Could Be Just the Beginning.

Another day, another new all-time high. The past few years have marked an exciting time to be an investor in Nvidia (NASDAQ: NVDA). Developments in the field of artificial intelligence (AI) sparked a blistering run that continues to this day.

Since the advent of AI in early 2023, Nvidia stock has gained 1,130%, as of this writing. This pushed its market cap past $5 trillion, the first company to surpass this lofty benchmark.

Nvidia's graphics processing units (GPUs) were originally developed to generate lifelike images in video games. In recent years, however, they've become the cornerstone of high-performance computing (HPC) and the backbone of AI. The rapid adoption of AI sparked unprecedented demand for these AI-centric chips, sending Nvidia stock soaring.

Some investors fear that Nvidia's best gains are already behind it. Yet if the bulls are to be believed, there could still be much more to come for the chipmaker. Below, I'll take a look at the developments that fueled its charter membership in the $5 trillion club and why there could be more to come.

Image source: Nvidia.

A flood of announcements

Nvidia's GPU Technology Conference (GTC) kicked off in fine form yesterday, with a flood of announcements about new products and partnerships that will set the stage for future success:

• Nvidia and Oracle will build the U.S. Department of Energy's largest AI supercomputer, featuring a record 100,000 Blackwell GPUs.
• The company will invest $1 billion in Nokia and collaborate to bring AI technology to mobile with the development of 6G.
• Nvidia is partnering with Uber to scale the world's largest robotaxi network.
• The company is joining forces with Palantir to build a unified technology stack to tackle operational AI.

Nvidia also made a slew of announcements regarding developments in physics, robotics, quantum computing, medical discovery, sovereign AI, and more.

Perhaps the biggest revelation, however, is that the company has "visibility" into a backlog of more than $500 billion for its Blackwell and next-generation Rubin AI chips through the end of next year. Indeed, CEO Jensen Huang said, "half a trillion dollars so far," suggesting that number could continue to rise.

Many on Wall Street were taken aback by the magnitude of the backlog, with some analysts scrambling to update their price targets in light of this new information. Matt Bryson, managing director of equity research at Wedbush, chimed in, saying, "Even assuming the most conservative interpretation of [Huang's] commentary [that all data center revenue across calendar years 2025 and 2026 would be over $500 billion] would suggest our assumptions for data center sales over the next six quarters are roughly 20% too conservative."

This illustrates the conundrum on Wall Street: Have sales of Nvidia's GPUs already peaked, or is the AI revolution just getting started?

AI: Bubble or early innings?

More broadly, AI has been touted as the most important development since the internet. The adoption of the groundbreaking technology has been called the "Fourth Industrial Revolution."

These prognostications and the resulting hyperbole have led some to believe that there's an "AI bubble" forming. Fueling that speculation is the fact that many AI-related stocks sport lofty valuations without a corresponding increase in revenue and profits to justify the multiple.

However, if Huang's backlog estimate is accurate -- and there's no reason to believe otherwise -- the company's valuation may, in fact, be conservative. Let's dig into the numbers for context.

During its fiscal 2025 (ended Jan. 26, 2025), Nvidia generated revenue that soared 114% to $130 billion. In the first two quarters of this fiscal year, sales have reached roughly $44 billion and $47 billion, respectively. Using Huang's estimate of $500 billion, spread equally over six quarters for simplicity, works out to about $83 billion per quarter -- nearly double its current revenue -- or estimated sales of $333 billion for its next fiscal year.

Nvidia's market cap just surpassed $5 trillion, and the stock has a forward price-to-sales ratio (P/S) of 24, as of this writing. Assuming the P/S remains constant, if Nvidia were to generate $333 billion in revenue next year, its stock price could jump another 64% to $330 per share, pushing the company's market cap above $8 trillion.

This suggests that, far from a bubble, Nvidia has the revenue and profit growth lined up to back up its premium valuation. Furthermore, as the architect of the AI revolution, it appears this could be just the beginning for Nvidia.

Danny Vena has positions in Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends Nvidia, Oracle, Palantir Technologies, and Uber Technologies. The Motley Fool has a disclosure policy.