Projected Revenue Growth

Morningstar Equity Research projects that Nvidia's AI‑related sales may near $400 billion by 2028. The firm identifies the company's accelerator portfolio—encompassing graphics processors and specialized machine‑learning systems—as the primary revenue engine through that horizon. The projection suggests a near‑half share of total company revenue could stem from these products by 2028, reflecting an estimated compound annual growth rate of roughly 40 percent in the accelerator market.

Drivers of Demand

The surge in AI hardware demand is closely tied to hyperscaler spending. Cloud giants such as Microsoft, Amazon and Google are forecast to exceed $450 billion in annual capital expenditures by 2027, more than triple the levels observed in 2023. Initial investments focus on training large‑scale language models and other AI tools, but the trajectory points toward broader enterprise applications and government‑led initiatives. This capital influx creates a favorable environment for Nvidia, positioning the company at the forefront of the AI accelerator market.

Potential Headwinds

Despite the optimistic outlook, the analysis notes a slowing growth momentum after 2024. While absolute revenue figures continue to rise, the rate of increase diminishes, indicating that maintaining extraordinary growth will become more challenging. Several factors could compound this slowdown: rising energy requirements for AI data centers, heightened governmental efforts to secure regional AI independence, and the possibility of regulatory intervention. These elements introduce uncertainty into Nvidia's near‑term fortunes, which remain heavily dependent on hyperscaler strategies.

Competitive Landscape

Nvidia's market leadership faces gradual erosion as competitors expand their footholds. Broadcom offers custom hardware solutions, while AMD provides general‑purpose systems that compete for share in the accelerator space. The broader semiconductor ecosystem—including foundries, software design firms and equipment providers—also stands to benefit from robust AI demand, further diversifying the competitive field.

Long‑Term Outlook

Even if Nvidia reaches sales close to $400 billion by 2028, the analysis underscores enduring challenges. Energy consumption, geopolitical dynamics, potential regulatory scrutiny, and intensified competition could reshape the operating environment. Historical patterns in the semiconductor industry reveal cycles of rapid expansion followed by abrupt corrections, suggesting that Nvidia must navigate both growth opportunities and systemic risks to sustain its position.

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