Nvidia, Microsoft likely to hit $4T market caps this year as AI Revolution rolls on: Wedbush

Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) are likely to hit $4T market caps this year and could reach the $5T milestone in the next 18 months, as the artificial intelligence revolution looks to be accelerating, Wedbush Securities said.

“The poster [children] for the AI Revolution are led by Nvidia and Microsoft as both are foundational pieces of building on the biggest tech trend we have seen in our 25 years covering tech stocks on the Street,” analyst Dan Ives wrote in a note to clients. “We believe both Nvidia and Microsoft will hit the $4 trillion market cap club this summer and then over the next 18 months the focus will be on the $5 trillion club, as this tech bull market is still early being led by the AI Revolution.”

Earlier this week, Nvidia reclaimed the crown of the world’s most valuable company from Microsoft after it hit an all-time high, amid rising enthusiasm. Nvidia’s market cap as of the close of trading on Thursday was $3.78T, while Microsoft sported a $3.7T market cap.

Apple (AAPL), which was once the world’s most valuable company, is the only other company with a $3T market cap.

The use cases of AI have “exploded” in recent months, with Ives mentioning cybersecurity, software, semiconductors and autonomous robotics as the major themes. Nvidia CEO Jensen Huang reiterated recently that robotics is likely to be the company’s next multi-trillion dollar opportunity after AI.

“While the first steps in AI deployments are around Nvidia chips and the cloud stalwarts, importantly we estimate that for every $1 spent on Nvidia, there is an $8-$10 multiplier across the rest of the tech ecosystem,” Ives added.