Nvidia Can Hit $1 Trillion in Annual Revenue in 5 Years, Analyst Says

Jensen Huang, co-founder and chief executive officer of Nvidia, at a conference in Paris in June. (Nathan Laine/Bloomberg)

A billion dollars is nice, but you know what’s better? A trillion dollars.

Nvidia might become the first company to generate $1 trillion a year in revenue by 2030, according to New Street. Analyst Pierre Ferragu believes it is possible because the company is the largest beneficiary from the investment in artificial-intelligence infrastructure.

Ferragu said capital expenditure is the main enabler of improvements in productivity in history. He noted technology has been the largest driver of revenue growth in the services economy.

His forecast of the optimistic scenario for AI matches what Nvidia CEO Jensen Huang said this week, the analyst said. The executive said on the company’s earnings call that he sees $3 trillion to $4 trillion in annual AI infrastructure spending by 2030.

“The AI bull case is that it transforms the global economy and accelerates growth,” Ferragu wrote. “$3-4 trillion tech infra spending in 2030 is consistent with this perspective.”

Under that scenario, the analyst sees an enormous revenue opportunity for Nvidia. He estimates Nvidia can achieve 55% to 60% share of the relevant AI market, equaling $1 trillion to $1.2 trillion in data-center revenue in 2030.

For context, Wall Street expects Nvidia to generate $184 billion in data- center revenue this fiscal year, which ends in January.

Nvidia reported solid earnings and provided a revenue forecast for the October quarter that was above expectations late Wednesday. The chip maker competes with custom-made AI chips made by large technology companies with help from Broadcom and Marvell Technology .

On Friday, Marvell stock fell as its latest financial results failed to meet rising expectations for its AI chip business.

Write to Tae Kim at tae.kim@barrons.com