Nvidia(NASDAQ: NVDA) has been one of many hottest shares available on the market prior to now 5 years, delivering outstanding beneficial properties of 1,300% to traders throughout this era and considerably outpacing the tech-laden Nasdaq Composite‘s returns of about 100%.
The semiconductor large’s terrific upside could be attributed to the wholesome demand for its graphics processing models (GPUs), that are powering a number of functions starting from artificial intelligence (AI) servers to vehicles to non-public computer systems to “digital twins.” These a number of finish markets have led to excellent progress in Nvidia’s income and earnings over the previous 5 years.
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Nvidia’s market capitalization of $2.5 trillion makes it the third-largest firm globally. The nice half is that Nvidia may ship extra beneficial properties sooner or later due to a large addressable market that would permit it to maintain wholesome income and earnings progress for years to return.
Nonetheless, there’s one other tech large that would outpace Nvidia in the long term, due to its presence in a number of multibillion-dollar finish markets. Let’s take a better at that title and verify why it has the potential to overhaul Nvidia’s market cap within the subsequent 5 years.
Amazon.com(NASDAQ: AMZN) is the world’s fourth-largest company, ranking behind Nvidia with a market cap of $1.9 trillion. That hole places Nvidia’s market cap 30% bigger than Amazon’s.
Amazon has underperformed each Nvidia and the Nasdaq Composite over the previous 5 years, registering beneficial properties of simply 45% throughout this era. One other factor price noting is that Amazon inventory has misplaced about 20% of its worth thus far in 2025 amid broader weak point within the inventory market as a result of tariff-fueled unease.
Nonetheless, the current pullback implies that traders now have a possibility to purchase a strong tech firm that may profit from a number of profitable markets at a pretty valuation. Amazon is without doubt one of the main e-commerce corporations on this planet, and it additionally dominates the huge cloud computing market that is set to get larger due to AI.
Amazon reportedly managed 40% of the U.S. e-commerce market final yr. That is an excellent place to be in because the U.S. e-commerce market is anticipated to indicate a wholesome annual progress fee of 15% by the tip of the last decade, producing annual income of over $19 trillion.
Importantly, Amazon is increasing its wings in overseas e-commerce markets as nicely. For instance, Germany is taken into account to be the most important e-commerce market in Europe, and Amazon has reportedly captured half of this market already. In the meantime, Amazon is the most important e-commerce participant within the U.Okay. as nicely, which is the second-largest e-commerce market in Europe and the third-largest globally.
The scale of the European e-commerce market is anticipated to triple between 2024 and 2030, producing over $10 trillion in annual income after 5 years. So, Amazon’s e-commerce section ought to witness strong progress going ahead, and an identical scenario ought to unfold within the cloud computing house as nicely.
Amazon’s 30% share of the cloud infrastructure market places it nicely forward of second-placed Microsoft, which has a 21% share. The cloud infrastructure market is projected to generate annual income of $2 trillion in 2030, in response to Goldman Sachs. AI is ready to play an necessary position in driving this market’s progress over the following 5 years, and the funding financial institution factors out that generative AI may account for 10% to fifteen% of worldwide cloud spending by 2030.
This huge end-market alternative may supercharge Amazon’s progress. The corporate’s Amazon Net Companies (AWS) cloud computing enterprise completed 2024 with nearly $108 billion in income, up by 19% from the year-ago interval. The potential dimension of the worldwide cloud infrastructure market and Amazon’s strong share on this house recommend that this section may take off remarkably in the long term.
Extra importantly, the corporate has been attempting to deliver down the price of working AI functions on AWS by creating in-house customized processors, which it claims can supply a 30% to 40% price-to-performance benefit as in comparison with cloud situations powered by graphics playing cards. Consequently, many corporations have began utilizing Amazon’s cloud situations powered by its customized AI processors to run AI workloads.
Amazon is ready to spend closely on capital expenditures (capex) this yr to shore up its AI infrastructure. Particularly, the corporate plans to bump up its capex by 20% in 2025 to $100 billion. This heavy spending goes to weigh on Amazon’s earnings progress this yr, with analysts anticipating its backside line to leap by 14% in 2025 to $6.32 per share.
Nonetheless, the forecast for the following couple of years factors towards an acceleration in Amazon’s earnings progress.
Its earnings may soar by 19% subsequent yr, adopted by a stronger soar of 25% in 2027. Assuming Amazon can maintain even a 20% annual earnings progress fee within the three years following 2027, its earnings may soar to $16.22 per share in 2030. If the inventory is buying and selling at 28 instances earnings at the moment, in step with the present stage of the tech-laden Nasdaq-100 index, its inventory value may soar to $454.
That might be 1.6 instances Amazon’s inventory value as of the April 16 market shut, which may ship Amazon’s market cap nearer to $4.75 trillion. This strong soar could possibly be sufficient for Amazon to overhaul Nvidia’s market cap over the following 5 years if the latter struggles on account of a drop in AI {hardware} spending or due to elevated competitors.
Provided that Amazon is at present buying and selling at 28 instances ahead earnings, traders are getting a great deal on this “Magnificent Seven” inventory that I predict will overtake Nvidia’s market cap within the subsequent 5 years.
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John Mackey, former CEO of Entire Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Harsh Chauhan has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Amazon, Goldman Sachs Group, Microsoft, and Nvidia. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft and quick January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.
