As the AI revolution enters its third year, Wall Street analysts predict that Nvidia (NVDA) and Microsoft (MSFT) may become the first companies valued at $4 trillion. Ivan Feinseth of Tigress Financial has raised Nvidia's target price to $220 per share, suggesting an 83% upside from its current price of $120, which would translate to a market value of $5. 3 trillion. Meanwhile, Joel Fishbein at Truist Financial maintained a $600 target price for Microsoft, indicating a 44% upside from its current $416 price and a market value of $4. 4 trillion. Both analysts based their assessments on reports about Chinese AI start-up DeepSeek, which reportedly created an advanced AI model at a lower cost than U. S. companies. This suggests confidence that U. S. firms will continue investing in AI infrastructure. Dan Ives of Wedbush Securities also anticipates Nvidia and Microsoft reaching $4 trillion valuations in 2025, dismissing the notion that DeepSeek's achievements are feasible without advanced Nvidia hardware. **Nvidia: Potential for 83% Growth** Nvidia is the leader in data center graphics processing units (GPUs), essential for AI workloads. Sales in this sector are expected to grow 29% annually through 2030.

In its latest fiscal quarter, Nvidia reported a 94% revenue increase to $35 billion, primarily driven by demand in the data center segment, with earnings up 103% to $0. 81 per share. With projections for adjusted earnings to rise 50% in the next year, Nvidia’s current valuation appears reasonable, with a PEG ratio under 1 suggesting a bargain. Dan Ives estimates that Nvidia has a $1 trillion market opportunity in both self-driving cars and advanced computing, potentially raising earnings estimates significantly. If Nvidia continues to meet or exceed expectations, it could reach a $4 trillion market cap by 2025. **Microsoft: 44% Growth Potential** Microsoft is leveraging growth in enterprise software and cloud computing, being the largest software company and second-largest public cloud provider globally. The company reported a 12% revenue increase to $69. 6 billion, driven by strong enterprise and cloud service sales, with a notable rise in AI-related revenue now at a $13 billion annual run rate, a 175% increase. However, its third-quarter guidance missed Wall Street expectations, leading to a 5% drop in shares. Currently trading at 33 times earnings with a PEG ratio above 3 indicates it might be overvalued, even as earnings are projected to grow 10% in the next four quarters.