Nvidia and Microsoft on Track to Hit $5 Trillion Market Cap by 2026

Nvidia and Microsoft shares have surged 18% year to date, outpacing the S&P 500, which has gained 6%. Analysts predict both companies will hit market values of $5 trillion by 2026, driven by robust growth in artificial intelligence (AI) and cloud computing.

William Stein at Truist Financial has set a target price of $210 per share for Nvidia, suggesting a 33% upside from its current price of $158. This would push Nvidia's market cap to $5.1 trillion. Meanwhile, Dan Ives at Wedbush projects Microsoft could reach $5 trillion within 18 months, implying a 39% increase from its current market value of $3.6 trillion and a share price of $690.

Nvidia is a leader in graphics processing units (GPUs) and AI accelerators, controlling about 90% of the AI accelerator market. The company recently added major customers like Alphabet's Google Cloud and Meta Platforms, which will deploy Nvidia's Spectrum-X Ethernet networking platform in their data centers. Nvidia's first-quarter financial results exceeded expectations, with revenue up 69% to $44 billion and non-GAAP net income increasing 33% to $0.81 per share. Despite new chip export restrictions affecting its China business, Wall Street expects Nvidia's adjusted earnings to grow at 41% annually through the fiscal year ending in January 2027.

Microsoft, known for its enterprise software and cloud computing, is also making significant strides in AI. The company's Microsoft 365 Copilot, a generative AI assistant, has seen a threefold increase in user adoption. Azure AI Foundry, a cloud service for training machine learning models and building AI applications, is also gaining traction. Microsoft reported strong financial results in the third quarter of fiscal 2025, with revenue up 13% to $70 billion and GAAP net income increasing 18% to $3.46 per share.

Grand View Research forecasts software-as-a-service revenue to grow at 12% annually through 2030, and cloud services sales to increase at 20% annually during the same period. Wall Street estimates Microsoft's earnings will grow at 13% annually through the fiscal year ending in June 2026. While the current valuation of 38 times earnings may seem high, Microsoft's potential to reach $5 trillion in the next 18 months remains a strong possibility.

Investors should consider the long-term growth prospects of both Nvidia and Microsoft, as their dominance in AI and cloud computing positions them well for continued success.