Nvidia’s (NVDA) mind-blowing success story is attracting hungry competitors — and that may stand in the way of the chip juggernaut eventually hitting a $10 trillion market cap.
“There’s very little likelihood that there isn’t competition out there [for Nvidia],” Goldman Sachs portfolio manager Brook Dane told Yahoo Finance Executive Editor Brian Sozzi on his ‘Opening Bid‘ podcast (see video above or listen here).
“We think the ASIC (application-specific integrated circuit) guys are doing an incredible job and likely to build scale,” Dane added.
Dane foresees strength in data centers with the capability to run large language models (LLMs), which lifts up ASIC manufacturers who supply chips needed for data infrastructure.
“We think the market does not appreciate how big the ASIC chip opportunity is for them,” he said regarding Marvel (MRVL), one of his fund’s top ten holdings.
KLA Corporation (KLAC), which is number one in his portfolio in terms of allocation, is likely to benefit from global demand in new geographies. The company supplies products and solutions for manufacturing of chips and circuits.
Dane also continues to be bullish on Micron (MU), despite a mixed outlook that hammered the stock last week.
Feeling FOMO around Nvidia right now — and ignoring some of its future competitors — would be understandable.
On June 18, Nvidia reached a market cap of $3.34 trillion, making it the highest-valued company globally — surpassing tech heavyweights Microsoft (MSFT) and Apple (AAPL). Nvidia’s stock currently trades at a hearty 21x estimated forward sales, up from 12x just two months ago.
Meanwhile, the stock recently traded at roughly 100% above its 200-day moving average.
In May, Nvidia reported above-consensus results for the quarter, with hosts of positive fodder for the bulls. Nvidia execs called out that demand for AI chips would continue to outstrip supply well into 2025.
The company is now beginning to build out AI factories, Nvidia CEO Jensen Huang told Julie Hyman and Dan Howley.
“Now you have software to think of, you have automotive to think of, you have robotics to think of, and that’s already pushing us easily past $10 trillion [market cap for Nvidia] by 2030,” I/O Fund lead tech analyst Beth Kindig told Seana Smith and Brad Smith on Yahoo Finance’s Morning Brief.
Nothing is guaranteed in tech land, Danes reminds the investing masses.
“I’d love to pretend like I know exactly where AI is going over the next five years,” he said. “We’re all trying to understand and put the pieces together to derive investment theories and action in our client accounts.”
In an episode of ‘Opening Bid‘, Bradesco head of equity strategy Ben Laidler makes the case for a 100% gain in the S&P 500 over the next five years. Listen in below.
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