1 Hedge Fund Manager Predicts Nvidia Will Be Worth $6 Trillion by the End of 2024. Could He Be Right?

Wall Street remains generally bullish about Nvidia (NASDAQ: NVDA) . The stock has skyrocketed more than 150% year to date and now boasts a market cap of nearly $3.2 trillion. Even after this huge gain, 21 of the 38 analysts surveyed by LSEG this month still recommend Nvidia as a buy or strong buy.

But that optimism pales in comparison to what one hedge fund manager expects. EMJ Capital's Eric Jackson predicts Nvidia will be worth $6 trillion by the end of 2024. Could he be right?

A bold prediction or a boneheaded one?

Jackson thinks Nvidia's share price will reach $250 by year-end. That's nearly twice the current share price. And it would put Nvidia's market cap at roughly $6.15 trillion, making the chipmaker the biggest company in the world by far. This prediction is either bold or boneheaded, depending on your perspective.

The biggest Nvidia bull on Wall Street right now is Rosenblatt Securities' Hans Mosesmann, who set a 12-month price target for the stock of $200. Mosesmann is definitely an outlier. The average price target for Nvidia is a little below the current share price, according to LSEG. Jackson's view makes Wall Street, including Mosesmann, look downright pessimistic.

Perhaps the most audacious aspect of Jackson's prediction (other than the short amount of time he expects it will take for Nvidia to nearly double again) is his primary rationale. He thinks the main reason the stock will continue to soar is that it's still cheap.

Aswath Damodaran, an NYU finance professor known as the "Dean of Valuation" because of his expertise in valuing stocks, would beg to differ. In February, he crunched the numbers on Nvidia and estimated its fair value at $680 per share. Since the company conducted a 10-for-1 stock split in June, this estimate translates to a fair value of $68 per share now -- nearly 50% below its current share price.

How it could happen

Let's suppose, though, that Jackson's prediction is right. How could Nvidia reach a market cap of more than $6 trillion by the end of this year? The hedge fund manager told CNBC in a recent interview:

I think what's going to happen in the second half of the year, as people start to see how well the Blackwell chips are selling, how good the gross margins are on those, and start thinking about what's to come with the Rubin chips around the corner, I think we'll start to see that euphoria reflected in a lofty go-forward price-earnings multiple, and if that happens, this thing can go to [a] $6 trillion market cap.

Let's unpack Jackson's statement. First, he expects exceptionally strong sales for Nvidia's graphics processing units (GPUs) based on its new Blackwell architecture. This seems to be a reasonable expectation to me. Nvidia has already indicated that the demand for these new Blackwell GPUs is greater than supply, a situation that could continue well into 2025.

Second, he thinks investors will be impressed with the Blackwell GPU's gross margins . Again, I suspect Jackson's view is realistic. Blackwell's total cost of ownership is 25 times lower than its Hopper GPUs with significantly lower energy consumption. I won't be surprised if the price Nvidia charges for the chips gives it a great gross margin.

Third, Jackson anticipates that the success of the Blackwell platform will cause many investors to be excited about the further growth prospects that Nvidia's next innovation -- the Rubin architecture -- will offer. I suspect he could be right on this too.

Fourth -- and, in my view, most important -- Jackson foresees investors experiencing euphoria that drives Nvidia stock to lofty levels. Is that farfetched? Not at all.

Possible but not probable

Jackson's reasoning for his prediction that Nvidia's market cap could top $6 trillion by the end of 2024 makes sense to me. However, it calls for greater euphoria than I think is likely.

Perhaps investors' enthusiasm about Blackwell and its successor Rubin platform will cause Nvidia stock to fly much higher than it already has. But while I think it's possible that Nvidia could be worth $6 trillion by year-end, I don't think it's probable.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy .