Nvidia’s (NVDA) stunning success story is attracting hungry competitors, and that could prevent the chip giant from eventually reaching a $10 trillion market cap.
“The chances are slim that there is no competition [for Nvidia]“, Brook Dane, a portfolio manager at Goldman Sachs, told Yahoo Finance Editor-in-Chief Brian Sozzi on his “Opening Bid” podcast (watch the video above or listen here).
“We believe that ASIC [application-specific integrated circuit] “Guys are doing incredible work and it’s likely we’ll grow at scale,” Dane added.
Dane foresees a strong position in data centers with the ability to run large language models, which plays a major role for ASIC manufacturers who supply the chips needed for data infrastructure.
“We think the market doesn’t realize how big the ASIC chip opportunity is for them,” he said of Marvell (MRVL), one of his fund’s 10 largest holdings.
KLA Corporation (KLAC), which is the No. 1 allocation in its portfolio, is likely to benefit from global demand in new regions. The company provides products and solutions for chip and circuit manufacturing.
Dane also remains bullish on Micron (MU), despite the mixed outlook that pressured the stock last week.
It would be understandable if you were feeling FOMO around Nvidia right now, and ignoring some of its future competitors.
On June 18, Nvidia reached a market cap of $3.34 trillion, making it the highest valued company in the world – briefly surpassed by tech heavyweights Microsoft (MSFT) and Apple (AAPL). Nvidia’s stock currently trades at a hefty 21x estimated forward sales, up from 12x just two months ago.
Meanwhile, the stock recently traded about 100% above its 200-day moving average.
In May, Nvidia reported above-consensus results for the quarter, providing plenty of positive fodder for the bulls. Nvidia executives predicted that demand for AI chips would continue to outpace supply well into 2025.
The company is now starting to build AI factories, Nvidia CEO Jensen Huang told Yahoo Finance’s Julie Hyman and Dan Howley.
“Now you have to think about software, you have to think about cars, you have to think about robotics, and that will easily take us past $10 trillion.” [market cap for Nvidia] “In 2030,” Beth Kindig, chief technical analyst at I/O Fund, told Seana Smith and Brad Smith in Yahoo Finance’s Morning Brief.
Nothing is guaranteed in technology land, Dane emphasizes to the investing crowd.
“I’d like to pretend I know exactly where AI is going to go in the next five years,” he said. “We’re all trying to understand and put the pieces together to derive investment theories and actions in our client accounts.”
In an episode of “Opening Bid,” Bradesco’s head of equity strategy Ben Laidler argued that the S&P 500 will rise 100% over the next five years. Listen below.
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Correction: An earlier version of this article misspelled Marvell’s name. We regret the error.
