Nvidia could be a $3 trillion company by the end of 2024, and Alphabet could join the ranks by the end of 2025.
Nvidia (NVDA 0.69%) and Alphabet (GOOGL -0.17%) (GOOG -0.28%) have delivered what can only be described as staggering returns to shareholders over the past five years, with their stock prices soaring 2,490% and 195%, respectively, while the S&P 500 (SNPINDEX: ^GSPC) is up just 80%.
Even better, this strong performance could continue for years to come: As companies invest in artificial intelligence infrastructure, Nvidia and Alphabet should benefit, and may soon join Microsoft and Apple as members of the elite $3 trillion club.
Here’s what investors need to know.
NVIDIA could be worth $3 trillion by the end of 2024
Nvidia’s market cap is currently at $2.7 trillion, meaning the stock would need to rise 11% for the company to reach a $3 trillion valuation, which could happen by the end of 2024. My reasoning is simple: Nvidia’s graphics processing units (GPUs) are the industry standard for accelerating complex data center workloads like artificial intelligence (AI), and companies are putting their money where their mouths are when it comes to AI.
As an example, JPMorgan Chase estimates that the top five cloud computing companies (Alphabet, Amazon, Meta Platforms, Microsoft, and Oracle) are on track to record $181 billion in capital expenditures (CAPEX) this year, representing a 36% increase in capital expenditure spending, driven primarily by the buildout of AI infrastructure, up sharply from a 10% increase last year.
Few companies, if any, will benefit more than Nvidia. The chipmaker has 98% market share in datacenter GPUs and up to 95% in AI processors, according to Mizuho Securities. Nvidia is also gaining momentum in other datacenter hardware segments: its Grace central processing units (CPUs) are growing into a multi-billion-dollar product line, and its InfiniBand/Ethernet networking platforms are already multi-billion-dollar businesses.
In fact, Nvidia’s market cap could cross the $3 trillion threshold when it reports its second-quarter results on August 28. Wall Street has underestimated sales and profit growth over the past four quarters, and a lower forecast could send the stock soaring, which seems likely. CFO Colette Kress recently said that demand for H200 and Blackwell GPUs “far exceeds supply, and we expect demand to continue to exceed supply next year.”
Blackwell GPUs are cutting-edge chips that deliver 4x and 30x faster AI training and inference, respectively, compared to the previous Hopper generation, while also being more power efficient and reducing total cost of ownership by 25x. CEO Jensen Huang recently told investors that the Blackwell architecture platform is likely to be our most successful product ever.
Going forward, Wall Street expects Nvidia to grow its earnings per share at 34% annually over the next three years. As such, the current valuation of 66 times earnings seems quite reasonable, making a $3 trillion valuation easily achievable. In fact, assuming earnings grow as fast as analysts expect, Nvidia would be a $4 trillion company in 2026 even if the stock traded at a more reasonable 45 times earnings.
Alphabet could be a $3 trillion company by the end of 2025
Alphabet’s current market capitalization is $2.1 trillion, and its stock price would need to rise 43% to reach a valuation of $3 trillion, which could happen by the end of 2025. Alphabet is the world’s largest ad tech company and the third-largest cloud infrastructure provider, and Grand View Research expects these markets to grow at annual rates of 22% and 21%, respectively, through 2030.
Building on this, Alphabet has been investing billions of dollars in AI product development over the years – in fact, Forrester Research recently recognized the company’s leadership in AI infrastructure solutions, and the company is applying its expertise to its adtech and cloud computing businesses.
Alphabet recently added conversational capabilities to Google Ads, allowing brands to create campaigns in natural language. It also introduced AI-powered image generation and profit optimization tools to boost conversion rates. These innovations should keep Google top of mind for advertisers. Plus, CEO Sundar Pichai said that AI Overview in Google Search is driving higher engagement and user satisfaction, which should ease concerns that the company will lose share in internet search.
Additionally, Alphabet has attracted over 1.5 million developers to Google Cloud with Gemini, a multimodal model that can process language, images, video, voice, and computer code. The company monetizes Gemini in a variety of ways. For example, Gemini is used by Google Workspace applications as a conversational assistant to automate tasks and accelerate coding projects. Gemini can also be tweaked and used to build custom generative AI applications.
Investment bank UBS recently released a report (Artificial Intelligence: Sizing and Seizing the Opportunity) that breaks down the AI value chain into three layers: the enabling layer, the intelligence layer, and the application layer. UBS analysts wrote that “in the near term, we see the biggest opportunities in the enabling layer,” which includes semiconductor companies like Nvidia and cloud computing companies like Alphabet.
To put that in perspective, Wall Street expects Alphabet to grow earnings per share 17% annually over the next three years, yet its stock trades relatively cheaply at 24 times earnings, while Wall Street expects Microsoft to grow earnings per share 14% annually, yet its stock trades relatively expensively at 37 times earnings.
If Alphabet delivers on these expectations and the market values its stock on par with Microsoft’s, it could be a $4 trillion company by the end of 2025. With that in mind, hitting $3 trillion is easily within reach, and investors should consider buying the stock today.
Randi Zuckerberg, former director of market development and public relations at Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool subsidiary. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of The Motley Fool’s board of directors. Trevor Jennewein owns shares of Amazon and NVIDIA. The Motley Fool owns shares of and recommends Alphabet, Amazon, Apple, JPMorgan Chase, Meta Platforms, Microsoft, NVIDIA, and Oracle. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
