Nvidia: Reiterate Buy As Blackwell To Drive Growth Through Next Year

Nvidia's TAM is projected at $2 trillion, with a conservative market cap estimate of $8T in 10 years, presenting limited downside risk for long-term shareholders.

A bear case assumes 50% market share and 50% margin, while a bull case assumes 90% market share and 78% margin, leading to a $54T market cap in ten years.

Key risks include a severe recession resetting client spend, loss of CEO Jensen Huang, and competition from AMD, Intel, and start-ups like Groq and Etched.

Despite risks, Nvidia's strong moat and AI-driven chip advancements suggest a strong buy with huge upside potential and limited downside.

Data center revenue grew 154% from the prior year to $26 billion, largely driven by strong demand for Hopper, GPU computing and networking solutions.

Blackwell is expected to now start production ramp in the fourth quarter, and this will continue into FY2026.

With the next generation models requiring 10 to 20 times more compute to train given significantly more data put into the model, the trend of continued purchases of the best-in-class compute for AI will likely continue.

Currently, cloud service providers make up 45% of Nvidia's data center revenue, with consumer, Internet and enterprise companies making up more than 50% of Nvidia's data center revenues.

Management highlights two major computing transitions: accelerated computing and generative AI, justifying ongoing capital expenditures and long-term sustainability of GPU demand.