A leading technology strategist says investors are still early to the artificial intelligence cycle and that Nvidia’s (NVDA) valuation could rise far beyond what most analysts currently expect.
In a new Fox Business interview, tech market expert Beth Kindig says public markets are treating AI as if it were a mature technology, even though the sector has not yet entered the monetization phase that typically drives earnings expansion.
“The argument I like to make is that AI is early-stage technology, much earlier than the public markets are used to. Typically, you incubate this at the venture capital stage. So the point being is we will get into a big stage here around monetization. We haven’t even gotten there yet to see AI truly monetized. We have not gotten to see how AI will affect profitability. So the naysayers are really jumping in a little too early.”
Kindig says the investment window before AI revenues and profits accelerate is where major upside exists.
“Where investors have this opportunity to get in before revenue starts to accelerate, before profits start to expand. Because by the time that that happens, these companies will all be trading much, much higher. So I like having that edge myself.”
Amid the long-term bullish stance on AI, Kindig says she sees leading chipmaker Nvidia soaring to a massive market cap.
“I put out a prediction for a $20 trillion market cap by the end of this decade. That’s a 36% CAGR (compound annual growth rate) over the next five years. They put up 25% quarter-over-quarter growth. They guided to 15 percent quarter-over-quarter growth in two quarters. I already met my CAGR I need for the next year. And it’s really that consistency that Nvidia keeps putting up that is making these numbers possible.”
Kindig says she issued the forecast to force investors to run the math and realize the long-term trajectory.
“When I put out the $20 trillion market cap, I wanted to give people a heads up that if you do the math, this company is headed higher for a long time. And I see it hitting that $20 trillion by the end of the decade.”
She adds that major technology companies are still only in the spending phase of the AI buildout and have not yet shown the return on investment that will ultimately flow into earnings and valuation.
“Big tech is clearly spending hundreds of billions of dollars. And we’re not at the point yet where we have seen that ROI where you know the revenue and the profits justify that spend. The argument I’m making is we will get there. And I actually think by the time you and I talk this time next year, some of those numbers are going to be moving in ways not currently in analyst estimates.”
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