Nvidia has become the first company to surpass a $4 trillion market cap, driven by exponential growth in AI and data center GPU applications, with projections suggesting it could reach $5 trillion before 2026.

Analyst estimates forecast Nvidia's earnings to hit $4.51 billion in fiscal 2026 and $6.43 billion in fiscal 2027, which could value the stock at around $257 based on a P/E ratio of 40, implying a market cap exceeding $6 trillion.

To achieve a $10 trillion valuation, Nvidia would need to increase its revenue from approximately $206 billion in 2026 to about $467 billion annually, requiring a growth rate of roughly 26.2% per year over the next five years.

Both Nvidia and Microsoft are considered resilient to economic downturns due to their high margins, substantial cash reserves, and strategic acquisition capabilities, positioning them well for sustained growth.

Despite their high valuations, Nvidia and Microsoft are viewed as strong long-term investment options because of their market leadership, financial strength, and growth prospects, especially in AI and cloud services.

Nvidia and Microsoft are part of the 'Ten Titans,' a group of leading tech giants that make up 39% of the S&P 500, and are well-positioned to withstand economic cycles thanks to their dominant market positions and robust financial health.

Nvidia currently holds about 92% of the data center GPU market, positioning it to benefit significantly from ongoing AI adoption, which is central to its growth trajectory.

Microsoft has diversified into cloud computing, AI, gaming, and hardware, leveraging strategic acquisitions like Activision-Blizzard, and aims to reach a $5 trillion market cap by growing earnings 10-15% annually through 2027.

Microsoft's diversified portfolio and strategic investments in cloud, AI, and gaming make it a resilient long-term growth stock, with a recent market cap of around $3.82 trillion and potential to hit $5 trillion.

Nvidia's growth is primarily driven by its GPU technology used in AI models, with major clients like AWS, Microsoft, and Google increasing their AI investments, fueling Nvidia's expansion.

Management forecasts a revenue of $54 billion for Nvidia's third quarter, indicating continued growth, with the AI market expected to be worth between $7 trillion and $15.7 trillion by 2030.

Despite its high valuation, Nvidia's growth potential and favorable PEG ratio suggest it may be undervalued relative to its future prospects, especially given its record revenue of $46.7 billion in Q2 and 73% growth in its data center segment.

Over the past decade, Nvidia has experienced extraordinary growth, with revenue increasing by 3,480%, net income surging by 10,640%, and its stock price rising by 26,000%, driven by AI demand and product innovation.