For those wanting exposure to a possible artificial intelligence revolution, Nvidia (NASDAQ: NVDA) shares look like a no-brainer buy. If AI is a gold rush, then Nvidia is out there selling the picks and shovels. The company’s computer chips are best in class, still making up 92% of market share for those used for AI, and revenues is counted in the hundreds of billions.
If electronically-engineered intelligence is truly going to be the next world-changing invention then it’s hard to see how Nvidia isn’t at the heart of it. The question I’m asking myself is: how high could the shares go? Could Nvidia shares grow 10 times in value again? Could they hit the $2,000 mark?
An impossible feat?
The first objection here is that Nvidia is quite a big company now. Do I win ‘understatement of the year award’ for that? It’s the largest company in the world! It has a market cap of $4.5trn! That’s trillion, by the way, with a ‘T’.
For context, the entire London Stock Exchange of over 2,000 companies is around $3.4trn. The entire S&P 500 of exactly 500 companies is worth around $52trn. The estimated market cap of the global stock exchange is $126trn.
For Nvidia to 10-bag from here, it would be a third of the value of the whole wide world! What a ridiculous notion. There’s no chance of that happening, is there? Or, is there?
Productivity gains
Nvidia, and specifically the high-performance chips it designs, are at the heart of large language models. One estimate puts their market share at 92%, an utterly dominant figure that never seems to fall. Wherever artificial intelligence takes us, Nvidia will be along for the ride.
And that’s the question, isn’t it? How much further can AI go? Are we headed for AGI – artificial general intelligence? That’s the type of intelligence where computers can essentially think like humans. If the boffins can figure that one out then we might be headed towards what is known as the ‘AI singularity’.
Here’s what one LLM has to say about this little term: “The AI singularity is a hypothetical point in time when artificial intelligence surpasses human intelligence and begins to recursively self-improve, leading to unpredictable and potentially transformative changes to human civilization.“
It’s a pretty big if, but if AGI is achieved, then productivity gains will surely be immense. If such fruitful economic gains come to pass then looking at 2025 market cap might be like looking at the figurative drop in the ocean. Surely it’s a fool’s errand to compare a post-AGI future to a pre-AGI present.
Nevertheless, AGI has not yet arrived. Nvidia shares are valued highly too. It’s not even clear whether current spending on Nvidia’s AI chips will be sustained.
It’s for these reasons that I can’t bring myself to get direct exposure to the stock (I own funds that count it in their portfolios). Still, if humanity figures out AGI or some other way to exploit artificial intelligence, a $2,000 share price doesn’t look that unlikely.
