Nvidia Nears US$6 Trillion: Why the 'Too Big to Grow' Rule Keeps Failing
Back in August 2018, Apple became the first U.S. company worth US$1 trillion, and the commentary that followed had a familiar shape: a company that big had nowhere left to go. By January 2022 it had touched US$3 trillion. Nvidia itself crossed US$1 trillion in 2023, and the same chorus warned it was priced for perfection. This fall it hit its first record since May, sitting near US$6 trillion after a disappointing start to 2026.
So the "too big to grow" rule has now been wrong about the largest companies in the world several times running. It deserves a closer look before anyone in Edmonton uses it to decide what to do with an RRSP.
Where the size argument breaks
The rule borrows from the law of large numbers. Doubling from US$100 billion means finding another US$100 billion of value. Doubling from US$5 trillion means finding US$5 trillion. Past a certain point, the thinking goes, the world simply runs out of buyers.
That logic treats a company like a jar filling with water. Nvidia's sales depend on something much more specific: how much Microsoft, Google and Amazon decide to spend on chips each quarter. Those three are locked in a spending race, each buying as many H100 and Blackwell chips as they can get so a rival doesn't train the better AI model first. When your customers are among the richest companies on earth and they're competing to outspend each other, your own size barely enters the equation.
The spending shows up here too. Statistics Canada reported on August 28, 2026 that Canadian business investment in computers and peripherals jumped 16.7% in the second quarter.
A better rule: watch the tenants
Anyone who owns a rental in Edmonton already understands the stronger version of this. A landlord's income doesn't depend on how many buildings the landlord owns. It depends on whether the tenants can keep paying rent.
Nvidia is the landlord of AI. Every company building a chatbot or a model rents its computing power, directly or through a cloud provider. The question that matters is whether those tenants are making enough money from AI to keep renewing. Right now the gap is wide: Nvidia's profits are enormous, and most of the companies using its chips haven't shown similar returns from AI yet. That gap is the real risk. The market cap number is just a scoreboard.
The strongest objection: A major networking company
The best counter-argument comes from history. In March 2000, a major networking equipment manufacturer was briefly the most valuable company in the world, selling the gear the internet ran on. Then the dot-com bust hit, its shares collapsed, and the stock spent more than two decades below that peak. Size, critics say, caught up with it.
Look at what actually happened, though. That company's customers were telecom companies that had borrowed heavily to lay fibre nobody was using yet. When they couldn't earn back the spending, they stopped buying. The company failed the tenant test, and its size had little to do with it. That's exactly the risk worth watching with Nvidia, alongside a few others analysts keep raising: most of these chips are made in Taiwan, and if the Bank of Canada or the U.S. Federal Reserve holds rates higher for longer, growth stocks get repriced fast.
What this means for an Alberta portfolio
You may own more Nvidia than you think. Megacap tech now makes up roughly a third of the S&P 500 by value, and most "Balanced" and "Growth" funds sold through Alberta banks lean heavily on U.S. tech. A first-time buyer saving a down payment in a TFSA growth fund is making a meaningful bet on one chipmaker without ever choosing to.
Open your fund's top-ten holdings list. Then ask a better question than whether Nvidia is too big. Ask whether the companies buying its chips are starting to get paid for what they built. When that answer turns, the stock will turn with it, whatever its size.
Back in August 2018, Apple became the first U.S. company worth US$1 trillion, and the commentary that followed had a familiar shape: a company that big had nowhere left to go. By January 2022 it had touched US$3 trillion. Nvidia itself crossed US$1 trillion in 2023, and the same chorus warned it was priced for perfection. This fall it hit its first record since May, sitting near US$6 trillion after a disappointing start to 2026.
So the "too big to grow" rule has now been wrong about the largest companies in the world several times running. It deserves a closer look before anyone in Edmonton uses it to decide what to do with an RRSP.
Where the size argument breaks
The rule borrows from the law of large numbers. Doubling from US$100 billion means finding another US$100 billion of value. Doubling from US$5 trillion means finding US$5 trillion. Past a certain point, the thinking goes, the world simply runs out of buyers.
That logic treats a company like a jar filling with water. Nvidia's sales depend on something much more specific: how much Microsoft, Google and Amazon decide to spend on chips each quarter. Those three are locked in a spending race, each buying as many H100 and Blackwell chips as they can get so a rival doesn't train the better AI model first. When your customers are among the richest companies on earth and they're competing to outspend each other, your own size barely enters the equation.
The spending shows up here too. Statistics Canada reported on August 28, 2026 that Canadian business investment in computers and peripherals jumped 16.7% in the second quarter.
A better rule: watch the tenants
Anyone who owns a rental in Edmonton already understands the stronger version of this. A landlord's income doesn't depend on how many buildings the landlord owns. It depends on whether the tenants can keep paying rent.
Nvidia is the landlord of AI. Every company building a chatbot or a model rents its computing power, directly or through a cloud provider. The question that matters is whether those tenants are making enough money from AI to keep renewing. Right now the gap is wide: Nvidia's profits are enormous, and most of the companies using its chips haven't shown similar returns from AI yet. That gap is the real risk. The market cap number is just a scoreboard.
The strongest objection: A major networking company
The best counter-argument comes from history. In March 2000, a major networking equipment manufacturer was briefly the most valuable company in the world, selling the gear the internet ran on. Then the dot-com bust hit, its shares collapsed, and the stock spent more than two decades below that peak. Size, critics say, caught up with it.
Look at what actually happened, though. That company's customers were telecom companies that had borrowed heavily to lay fibre nobody was using yet. When they couldn't earn back the spending, they stopped buying. The company failed the tenant test, and its size had little to do with it. That's exactly the risk worth watching with Nvidia, alongside a few others analysts keep raising: most of these chips are made in Taiwan, and if the Bank of Canada or the U.S. Federal Reserve holds rates higher for longer, growth stocks get repriced fast.
What this means for an Alberta portfolio
You may own more Nvidia than you think. Megacap tech now makes up roughly a third of the S&P 500 by value, and most "Balanced" and "Growth" funds sold through Alberta banks lean heavily on U.S. tech. A first-time buyer saving a down payment in a TFSA growth fund is making a meaningful bet on one chipmaker without ever choosing to.
Open your fund's top-ten holdings list. Then ask a better question than whether Nvidia is too big. Ask whether the companies buying its chips are starting to get paid for what they built. When that answer turns, the stock will turn with it, whatever its size.
Sources
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