Nvidia is the most valuable company publicly listed in the world. This comes after months of explosive growth, driven by the demand for its chips as well as an investor frenzy about artificial intelligence.
The company’s share price rose 3.5 percent to $135.58, bringing the market capitalisation up to $3.335tn. It has now surpassed two other tech giants who have been battling for top spot on US stock exchanges.
Nvidia is the main beneficiary of an increase in demand for chips capable of training and running powerful generative AI model such as OpenAI’s ChatGPT. In less than two short years, the company has transformed from a $300bn chip-stuffing company exacerbated due to the cryptocurrency crash into one of Silicon Valley’s most powerful tech giants.
The huge gains in its share prices have driven a third (14%) of the increase in the benchmark S&P 500 Index year to date. This rally has even shocked bullish observers.
Ted Mortonson is a tech strategy at Baird. He said, “This is human emotion now taking over, this animal spirit.” Don’t misunderstand me, Nvidia is an amazing company. There are many drivers [for stock]. . . But 40% in a single month is not normal.”
The Silicon Valley company, founded 31 years ago, has seen its revenue grow by a staggering 265% in February, and another 262% in May. The company’s shares have risen by approximately 170 percent since the beginning of the year.
Nvidia’s chief executive Jensen Huang declared that his company was at the forefront of a “new industrial revolution” by unleashing the power generative and AI in order to transform the global economy through intelligent computing.
Google, Microsoft and Amazon have all purchased its Hopper series of graphic processing units for their cloud services. Nvidia’s Software ecosystem Cuda’s dominance is cemented by its tools, which are available to developers who use its chips.
Huang has promised a “one year rhythm” for new releases. AMD and Intel, who have also launched AI chips of their own, have not yet been able to significantly reduce Nvidia’s market share.
Stacy Rasgon is a Bernstein chip analyst. She said, “Someone’s going to be the number one. And it’s no accident that the stock of Nvidia went up. The financials are even higher.” “I have never seen anything like this, in terms of economics. It’s amazing.”
The tech industry is racing to capitalize on the potential of generative AI. Apple, at its annual developers’ conference, joined the race, announcing its own suite of generative model that will be embedded in their new operating systems, and signing a significant partnership with OpenAI.
Nvidia’s growing influence over the broader stock indexes has raised concerns about the sustainability of the rally in the long term, but few analysts and investors predict a reversal within the next six months.
Bloomberg tracked 72 Nvidia analyst ratings. Only one of them rated the stock a “sell”.
“This market’s top-heaviness is very concerning.” . . We’re at levels that we haven’t seen since 1999 – that’s a problem,” said Hans Olsen. He is the chief investment officer of Fiduciary Trust – a $23bn wealth management company. “But, if you look back at the tech bubble from 1997 to March 2000, that had a very long runway.” “This one has runway too.”
Nvidia has been the leader of the S&P 500 for the past 12 years. Apple and Microsoft have been competing for the title of the most valuable company in America — and sometimes the world — since more than a ten-year period.
ExxonMobil, the largest company in the US at the time, was the last company to be worth more than the two of them.
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