- Nvidia accelerators remain the company’s strongest revenue driver through 2028
- Hyperscaler spending could exceed $450 billion annually by 2027
- Growth in AI hardware is already showing signs of slowing
New predictions have claimed Nvidia’s AI-related sales could approach $400 billion by 2028, a projection that shows the scale of demand but also raises questions about sustainability in such a rapidly evolving market.
The analysis by Morningstar Equity Research claims Nvidia’s AI accelerators, spanning graphics processors and systems designed for machine learning, will remain the company’s most important revenue source over the next several years.
With nearly 40% compound annual growth projected in the accelerator market, these products could represent close to half of Nvidia’s total revenue by 2028.
Rapid acceleration of AI-driven revenue
Artificial intelligence has become the centerpiece of global technology investment, reshaping both infrastructure and corporate strategies, and is expected to be the dominant growth driver across the semiconductor industry, quickly becoming a valuation anchor for Nvidia.
However, the assumption that this trajectory continues without disruption reflects optimism that may not fully account for sector volatility.
A central driver of this growth is hyperscaler investment – cloud providers such as Microsoft, Amazon, and Google are forecast to push annual capital expenditures beyond $450 billion by 2027, more than triple the levels of 2023.
This surge is initially tied to training large-scale language models and other AI tools, but it is expected to expand into enterprise applications and government-led initiatives.
While these trends create favorable conditions for Nvidia, they also introduce uncertainty, as the company’s near-term fortunes remain dependent on hyperscaler strategies.
Morningstar’s forecast places Nvidia firmly at the top of the AI accelerator market, followed by competitors such as Broadcom with custom hardware and AMD with general-purpose systems.
Yet the semiconductor industry has a long history of cyclical downturns, where rapid expansion is often followed by abrupt corrections.
At the same time, companies across the value chain, including foundries, software design firms, and equipment providers, are positioned to benefit from AI demand.
This diffusion of growth suggests Nvidia’s dominance could face gradual erosion as competitors capture larger shares of the market.
A more complicated picture emerges when looking beyond the immediate surge, as Morningstar’s chart shows while AI accelerator and networking sales are projected to more than triple by 2029, the rate of growth started declining sharply after 2024.
This creates a paradox: absolute revenues keep rising, yet the pace of increase slows noticeably.
For Nvidia, this cooling momentum signals a period when sustaining extraordinary growth becomes far more difficult.
Even if Nvidia reaches sales close to $400 billion by 2028, longer-term challenges are unavoidable.
Rising energy requirements for AI data centers, increased government efforts to secure regional AI independence, and the possibility of regulatory intervention could all reshape the operating environment.
Market leadership at this scale has also historically attracted political scrutiny and heightened investor caution, adding another layer of risk to the outlook.
