KUALA LUMPUR (July 17): Nvidia’s market cap will soar to US$50 trillion (RM233.84 trillion), according to an early investor in Amazon and Tesla.

Citing James Anderson, a former partner at investment giant Baillie Gifford, as telling the Financial Times, Fortune magazine on Wednesday reported that the potential scale of Nvidia in the most optimistic outcome is both way higher than ever seen before, and could lead to a market cap of double-digit trillions.

“This isn’t a prediction, but a possibility if artificial intelligence (AI) works for customers and Nvidia’s lead is intact,” said Anderson.

Fortune said Nvidia along with tech giants Amazon, Google, Microsoft and Apple are worth US$14.5 trillion, and make up about 32% of the S&P 500.

With the AI darling’s data centre revenue growing at about 60%, Anderson calculated that should the pattern continue over the next decade, the company would have a market capitalisation of about US$49 trillion.

That is more than the entire value of every company in the S&P 500, which is roughly US$45.84 trillion.

Anderson estimated a 10% to 15% probability of this outcome.

Anderson’s projection is a lofty one, but his hunches have proven correct before.

With a go-big-or-go-home mentality, he was one of Amazon’s and Tesla’s biggest champions. For the electric vehicle giant, Anderson’s investment was second only to chief executive officer Elon Musk's.

From 2005 to 2021, Scottish Mortgage Investment Trust, managed by Baillie Gifford, saw returns of 2,240%.

It invested in Nvidia in 2016. Lingotto Investment Management, where Anderson is now an investor, has a US$650 million fund, with Nvidia as its largest position.

Nvidia didn’t have a clear path to success when Anderson first began investing in the company, he said.

It remained to be seen if it would be a gaming, crypto, or AI company. But it did have the advantage of early success, unlike Amazon and Tesla, which “didn’t start from highly profitable and dominant positions but had to get there”.

In some ways, Anderson still sees Nvidia as a nimble company.

“It is the long duration of the development of [graphic processing unit] usage in AI — and not just AI — from excitement, through potential pauses, to transformation of industries that is most important to us,” Anderson said.

However, Fortune said other finance experts don’t share Anderson’s bullish take on Nvidia.

Aswath Damodaran, a professor of finance at New York University’s Stern School of Business, argues that Nvidia is riding a wave of early AI optimism.

“The momentum is clearly with Nvidia,” Damodaran told CNBC in May.

“They can do nothing wrong. Everything they touch turns to gold.”

Damodaran said Tesla experienced a similar rally in 2020, when its market cap soared, peaking in 2021 at US$1.2 trillion, only for shares to plummet about 30% this year alone.

Meta and Google also grappled with increased competition that have loosened their grip on the tech world.

While Nvidia has the earnings to back up its sky-high value, expectations for the future of the company may be too steep, he argued.

Damodaran said the AI chip market is not worth US$1 trillion alone, and the AI market more broadly is worth about US$2 trillion or US$3 trillion, meaning Nvidia would have to tap into several big AI markets to maintain and grow its value.

“It is clearly a possibility,” Damodaran said. “But is it plausible? I don’t think so.”