Nvidia’s artificial intelligence sales are projected to climb to almost US$400 billion by 2028, according to new research, underscoring the extraordinary demand for its technology while highlighting concerns about how sustainable this growth will be in the years ahead.
Strong growth driven by hyperscaler investment
The forecast, published by Morningstar Equity Research, suggests that Nvidia’s AI accelerators will remain the company’s most important source of income for the foreseeable future. These accelerators, which include graphics processors and systems tailored for machine learning, are expected to represent close to half of the company’s total revenue by 2028.
Morningstar estimates that the AI accelerator market will grow at nearly 40% annually, driven largely by the spending power of cloud computing giants such as Microsoft, Amazon, and Google. These hyperscalers are projected to push their combined capital expenditures above US$450 billion by 2027, more than triple what they invested in 2023.
Initially, much of this outlay is aimed at training advanced language models and other AI systems. However, investment is expected to expand into enterprise solutions and government-backed initiatives, strengthening demand for Nvidia’s technology.
While this momentum places Nvidia in a favourable position, its fortunes remain closely tied to hyperscaler strategies, leaving the company exposed to shifts in how these firms allocate their budgets.
Competition and cyclical pressures in semiconductors
Morningstar’s outlook places Nvidia firmly at the top of the AI accelerator market, with competitors such as Broadcom providing custom hardware and AMD offering general-purpose solutions. Despite this dominance, history suggests caution. The semiconductor industry is well known for its cyclical nature, with phases of rapid expansion frequently followed by sudden contractions.
In addition, growth is not limited to Nvidia alone. Foundries, software developers, and equipment manufacturers are also benefiting from the rising demand for AI infrastructure. This broadening of the value chain suggests Nvidia’s market share could gradually decline as rivals strengthen their positions.
Morningstar’s projections reveal that although AI accelerator and networking sales are expected to more than triple by 2029, the pace of growth has already started slowing since 2024. This creates a paradox in which revenues continue to rise, but the rate of increase becomes less pronounced, raising questions about how long Nvidia can sustain its current momentum.
Long-term risks to Nvidia’s dominance
Beyond 2028, the challenges facing Nvidia become more complex. Meeting the soaring energy requirements of AI data centres will be a growing issue, while governments worldwide are pushing to secure regional independence in AI technology. Such moves could result in stricter regulations and reshape the competitive environment.
Morningstar also notes that market leadership on this scale historically draws political scrutiny and makes investors more cautious, adding further pressure to Nvidia’s long-term prospects.
Even if sales approach US$400 billion by 2028, the company will need to adapt to a slower pace of expansion and a more uncertain regulatory and competitive landscape.
