Nvidia’s $5 Trillion Market Cap Still Undervalued? Wall Street Titan Loeb Is Firmly Bullish on Nvidia

TradingKey - Amid the booming artificial intelligence industry, Nvidia ( NVDA) is undoubtedly the brightest star. The tech giant's market capitalization has surpassed the $5 trillion mark, becoming the world's first technology company to reach this milestone.

However, just as the market widely believes that Nvidia's valuation has peaked, billionaire investor and Wall Street hedge fund titan Dan Loeb has offered a different perspective. He believes that Nvidia remains undervalued and that its future earnings potential far exceeds market expectations.

Over the past year, Nvidia's share price has risen by more than 46%.

Loeb: NVIDIA Remains the Most Attractive Sector in the Market

Loeb is the founder of Third Point, a New York-based hedge fund that specializes in event-driven, value-oriented investing. Since its inception in 1995, Loeb has led Third Point from its initial $3 million to a major firm with approximately $25 billion in assets under management.

Renowned on Wall Street for his sharp investment acumen and bold style, Loeb is often referred to as a "Wall Street titan." In a recent episode of the "All In" podcast, Loeb pushed back against the idea that Nvidia's massive market capitalization suggests its best days are behind it.

He stated that investors are underestimating Nvidia's profitability and noted that Wall Street had previously made similar mistakes regarding Amazon ( AMZN) and Google ( GOOGL ). "I think in the future we'll look back and realize it was foolish to view Nvidia that way," Loeb added.

Loeb believes that Nvidia's sheer scale has become a psychological barrier for investors, particularly for hedge funds and long-short managers. Due to its massive valuation, they instinctively assume the stock "naturally" should be a target for short selling.

He emphasized that investors have fallen into the same trap before: "Google and Amazon were both safe short targets; this happens from time to time—sometimes their valuations stall and then suddenly break out. I believe the same will eventually happen for Nvidia."

In fact, Nvidia's fundamentals are exceptionally strong. As the global leader in AI chips, Nvidia provides the silicon used for training and running models to OpenAI, Google, Anthropic, and other AI developers, making it the primary winner of the AI boom.

Since early 2023, Nvidia's stock has surged nearly 14-fold, making it one of the biggest winners of the AI era on Wall Street. Data shows the company has exceeded market expectations for both revenue and profit for 14 consecutive fiscal quarters. This rally has also propelled CEO Jensen Huang into the ranks of the world's wealthiest individuals.

Notably, Huang stated in March that it is "highly likely"—and perhaps even "inevitable"—that Nvidia's market cap will reach $10 trillion in the future.

He believes that as we enter an "AI-native era" requiring massive computing power, and as computers transform into revenue-generating "factories," global GDP growth will accelerate. The portion dedicated to computing will be dozens of times higher than in the past, allowing Nvidia's scale to grow significantly under this new economic landscape.