1 Market-Crushing AI Stock Is Closing in on a $4 Trillion Market Cap, and 1 Wall Street Analyst Thinks There Is Another 57% Upside

Key Points

• Once unheard of, there are now a handful of stocks trading at multitrillion-dollar market caps, largely thanks to exuberance around artificial intelligence.

• One of these AI stocks has generated phenomenal returns for investors.

• But Wall Street analysts think there's plenty more room to run, considering the intense levels of future spending on AI.

• 10 stocks we like better than Nvidia ›

Artificial intelligence has taken the market by storm. There likely hasn't been a sector with this much interest since the internet boom, and it still looks like the AI sector is in the early innings. That doesn't mean it won't stumble along the way, and progress may not be linear, either. But it also means that market leaders today could be even bigger in five, 10, or 20 years.

In fact, investors are so bullish on the sector that some AI names have already been run up to multitrillion-dollar market caps, which once might have been unimaginable. One company in particular is nearing a $4 trillion market cap, and one Wall Street analyst thinks the party has only just begun, with significant gains to be made over the next 12 months.

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The invincible chip king

The AI chip king, Nvidia (NASDAQ: NVDA), is seemingly invincible and is viewed as the ultimate pick-and-shovel play for AI. Even when challenges present themselves and the stock stumbles, it doesn't last very long.

Image source: Getty Images.

This year alone, Nvidia has faced numerous challenges. First, the Chinese company DeepSeek put a serious scare into AI investors earlier this year after it supposedly developed an AI chatbot that rivaled OpenAI's ChatGPT at a fraction of the cost. However, since then, many have questioned the amount of resources that actually went into building DeepSeek.

Then, President Donald Trump's administration launched wide-ranging tariffs and export restrictions on certain chips made by Nvidia that seriously threatened Nvidia's ability to penetrate the Chinese market, which has been a significant source of revenue for the company. While tariffs may end up being more manageable than initially thought, considering all of these challenges, it's pretty remarkable that Nvidia's stock is now up close to 15% this year and has risen to a $3.86 trillion market cap, making it the largest publicly traded company (as of July 7).

Next stop: $6 trillion+

In late June, Loop Capital Analyst Ananda Baruah became Nvidia's biggest bull on Wall Street, issuing a $250 price target for the stock, implying a market cap of over $6 trillion.

Baruah sees Nvidia's next leg higher being fueled by even more intense spending by hyperscalers like Amazon and Microsoft, which are poised to increase spending on graphics processing units (GPUs) and accelerators as these companies increase their AI-related infrastructure from 15% of their total infrastructure to over 50% by 2028.

Baruah also expects rising AI factory demand to play a big part in the Nvidia story over the next couple of years. AI accelerator and generative AI spending could rise by $2 trillion by 2028, while gigawatt demand for these factories could create a pipeline for Nvidia of $450 billion to $900 billion over the next few years. More intensive AI reasoning models could also lead to more spending on Nvidia's AI servers.

Baruah is modeling for data center revenue to more than double from $115 billion now to $367 billion by fiscal year 2028, and Nvidia "remains essentially a monopoly for critical tech."

Perhaps less discussed is Nvidia's robotics efforts, which are starting to get more attention from the market. The company recently released a new humanoid robot called AEON, and Nvidia's CEO Jensen Huang has called humanoid robots, which would ideally be able to complete household chores, possibly "one of the largest industries ever," according to Barrons. Analysts are already projecting a 344% rise in revenue in Nvidia's robotics and auto division by the early 2030s.

Is the stock a buy?

It's no surprise to see Wall Street analysts bullish on Nvidia, which has returned 1,420% over the last five years. Nvidia has been able to overcome every obstacle thrown its way, and the future looks bright.

From a valuation perspective, Nvidia trades at 37 times forward earnings, above its five-year average of roughly 34.3 times, so the stock is not cheap, historically speaking. There are also concerns that the company may be overearning and may not be able to charge as much for its chips in the future. China still looks to be a sore spot for the company due to the regulatory environment, and three-year market projections on AI data center spend and factory demand are largely conjecture.

But Nvidia is still clearly the market leader and has significant pricing power. It's still likely the early innings for AI, and the company will be difficult to dethrone, so I think investors can certainly buy the stock. However, given the elevated valuation, it may be best to practice dollar-cost averaging. The market is still at all-time highs, so a decline in market sentiment could lead to a big sell-off and be difficult to shake off -- even for a juggernaut like Nvidia.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.