A chief investment officer said that $NVIDIA (NVDA.US)$The free cash flow expectations for the next two years highlight the huge potential of this AI chipmaker.
Free cash flow is the cash generated by the operating activities of a company after deducting capital expenditures. It represents the funds that the company can distribute to shareholders, repay debts or reinvest in the business, all of which usually help boost the stock price.
Yuri Khodjamirian, chief information officer at Tema ETFs, emphasized, "What really surprised me is that Nvidia's FCF forecast for 2026 is higher than Microsoft's." Data showed that Wall Street analysts expect Nvidia's FCF to rise to $78.7 billion and $91.1 billion, respectively, in fiscal 2025 and 2026, surpassing Microsoft, which is currently the world's most valuable company.
This forecast is driven by the surge in demand for Nvidia's AI chips as software companies increasingly rely on these powerful processors to power their AI models.
$Microsoft (MSFT.US)$, $Amazon (AMZN.US)$ and $Alphabet-A (GOOGL.US)$The spending of software giants is pushing Nvidia and other semiconductor companies' stock prices to new heights.
Last week, Nvidia's market cap surpassed $3 trillion for the first time, briefly overtaking Microsoft to become the second largest listed company.$Apple (AAPL.US)$, becoming the second largest publicly traded company.
Khodjamirian pointed out that Nvidia's products released every year are "setting trends" in the industry, making it difficult for competitors to match. "I think the fundamentals of the company are very bright," said Khodjamirian, who manages Tema ETFs.
However, some investors, including Khodjamirian, believe that the revenue potential of AI software (Nvidia's customers) is still uncertain, which could limit the future growth of AI stocks.
Anthony Ginsberg, CEO of Gins Global, dismissed these concerns, saying that AI is accelerating the adoption of cloud services, and a large part of US IT spending is cloud-centric.
Ginsberg said: "If you're a CEO and you don't have a mission for AI, you're going to get crushed."
Ginsberg predicts that more and more Fortune 500 companies will outsource their AI and algorithm businesses to cloud service providers, benefiting companies such as Google Cloud and Microsoft Cloud.
Edited by Jeffrey