NVIDIA Could 10X Its Sales. One Bottleneck Is Stopping It

NVIDIA’s chip sales could grow to $2 trillion, with possible outcomes of $2.5 trillion or $3 trillion by 2027, implying roughly a tenfold increase from about $215 billion in recent sales. The main limiting factor is wafer supply from Taiwan Semiconductor. If NVIDIA could build unlimited capacity, AI capital expenditures could shift into bubble territory. Recent results show strong momentum, with Q1 adjusted EPS of $1.87 versus $1.76 estimated and revenue of $81.62 billion versus $78.86 billion estimated, excluding China data center compute. Data Center revenue nearly doubled, driven by hyperscalers. Customer demand is reflected in multiyear GPU deals and large contracted system gigawatts, alongside substantial supply-related commitments for wafers, packaging, and HBM.

"NVIDIA's chip sales, he argued, could grow to $2 trillion, possibly $2.5 trillion, possibly $3 trillion by 2027. The company sold roughly $215 billion in chips last year. The high end of Baker's scenario is roughly a 10x increase. The interesting part is what Baker thinks is preventing it. A single constraint, in his view, stands between NVIDIA and that outcome: wafer supply from Taiwan Semiconductor."

"If NVIDIA could build as much as it wanted, AI capex would tip into bubble territory. The bottleneck is the circuit breaker. What NVIDIA's order book already looks like NVIDIA posted yet another beat in Q1, with EPS at $1.87 adjusted vs. $1.76 estimated. Revenue came in at $81.62 billion vs. $78.86 billione stimated. These figures exclude any China data center compute."

"Data Center revenue nearly doubled, with hyperscalers accounting for half of it. The demand pipeline behind Baker's math is concrete. Meta has signed a multiyear deal for millions of Blackwell and Rubin GPUs. OpenAI has contracted for 10 gigawatts of NVIDIA systems. Anthropic has committed to 1 gigawatt, CoreWeave 5 gigawatts by 2030. Jensen Huang's read on Q3 was succinct. "Blackwell sales are off the charts, and cloud GPUs are sold out.""

"NVIDIA carried $95.2 billion in supply-related commitments at the end of Q4, money already promised to vendors to lock in wafers, packaging, and HBM. Wall Street's analyst target sits at $275.31 against a stock that has risen 62.77% over the past year. The forward multiple, 27x, looks almost restrained given a profit margin of 55.6%."

Read at 24/7 Wall St.