NVIDIA Stock Forecast: Why NVDA could reach $9 trillion valuation by 2030

The world's most valuable company could be valuing $9 trillion over the next five years.

Melius Research analyst Ben Reitzes believes Nvidia can notch its $9 trillion market capitalization by the end of the decade.

The Chip giant is poised to capture a large share of overall demand for AI infrastructure, Reitzes said in a video presentation to its client on Monday. This could potentially bring the company's annual revenue to $600 billion by 2030, according to Merius' estimates, and could support its large valuation targets.

“I think the most important thing for long-term investors is to see power,” Reitzes added. “Power is the biggest constraint.”

There are several moving parts in the reitzes paper:

• AI Energy Demand It will continue to grow. Gigawatt energy demand due to AI is expected to record a combined annual growth rate of 30% per year by the end of the decade, citing McKinsey figures. This means demand for AI workloads that will hit 156 gigawatts by the end of 2030.

• Each gigawatt of demand could lead to between $40 billion and $50 billion in Nvidia's revenue opportunities. This is based on estimates the company shares with investors.

  However, we estimated that Nvidia's revenue opportunities could rise to up to $60 billion by the end of the decade, given inflation and other factors.

  Assuming energy demand increases at a 30% pace, that means by 2030, Nvidia's annual revenue opportunities will rise to around $2 trillion, Reitzes said.

• Nvidia will gain a significant share of the AI infrastructure market. Nvidia has already partnered with data center companies and other hyperschools to capture a portion of the AI infrastructure market, Reitzes said.

  “What does that mean? It means they're becoming infrastructure players and should have a meaningful share of AI workload buildout,” he added.

  Assuming Nvidia is winning 30% of the market, this means that by the end of the decade it will draw around $600 billion in annual revenue. This supports the company's $9 trillion valuation, and Reitzes said it uses an annual revenue multiple of 15, using the annual revenue multiple that is the basis for his calculations.

Nvidia became the first company to achieve a $4 trillion valuation in July. An estimated valuation of the quote means that the company will more than double its market capitalization over the next five years.

“Now, I'm not saying by what year they'll get there, but at the end of the decade, that's possible,” he added.

There is one caveat. Reitzes estimates rely on industry players who are investing in the industry to support the demand for AI energy. By 2030, it would take around $5 trillion to unleash the energy needs he outlines.

“The industry can invest $5 trillion to release these gigawatts, so can Nvidia become a strategic vendor with a revenue of $600 billion by the end of the decade?

Investors are waiting for NVIDIA to report its second quarter revenues next Wednesday after the closing bell.