admin Nvidia has outperformed both Microsoft and Apple to become the most valuable publicly listed company worldwide, following an extraordinary increase in its share price. On Tuesday, Nvidia’s shares rose by 3.5%, reaching $135.58, which elevated its market capitalisation to an impressive $3.335 trillion. This surge has pushed the company ahead of the tech giants that have long dominated US stock markets.
The rise in Nvidia’s value is primarily driven by the growing demand for its chips, which are essential for training and operating advanced generative AI models like OpenAI’s ChatGPT. Over the past two years, Nvidia has transformed from a $300 billion company dealing with a chip surplus exacerbated by a cryptocurrency downturn into a dominant force in the tech industry. Major Silicon Valley companies are now eager to acquire Nvidia’s latest products.
Nvidia’s significant increase in share price has also notably impacted the broader market. The company’s stock alone has contributed approximately one-third of the 14% year-to-date rise in the S&P 500 index. This rally has surprised even the most optimistic market observers.
Generative AI Boom Fuels Growth
Founded 31 years ago to create computer graphics cards for gamers, Nvidia has experienced consecutive quarters of substantial revenue growth, reporting a 265% year-on-year increase in February and 262% in May. Its shares have surged roughly 170% since the beginning of the year. Nvidia’s CEO, Jensen Huang, has stated that the company is at the forefront of a new “industrial revolution,” utilising generative AI to transform various sectors globally with intelligent computing.
Tech giants such as Google, Microsoft, and Amazon have acquired Nvidia’s Hopper series of graphic processing units for their cloud services. Nvidia’s software ecosystem, Cuda, which provides tools for developers utilising its chips, solidifies its market dominance. Despite competitors like AMD and Intel launching rival AI chips, they have yet to significantly challenge Nvidia’s market share.
The company is also preparing to release its new generation of more powerful Blackwell chips, with Huang promising an annual cycle of new releases. Analysts, however, express concerns about the long-term sustainability of this market rally due to Nvidia’s growing influence over broader stock indices. Yet, the majority of analysts remain optimistic about Nvidia’s future, with only one out of 72 tracked by Bloomberg rating the stock as a “sell.”
Hans Olsen, chief investment officer at Fiduciary Trust, pointed out that the market’s heavy reliance on a few top companies is worrisome, comparing it to levels not seen since 1999. He acknowledged the concern but noted that, similar to the tech bubble that lasted from 1997 until March 2000, there is still potential for this market trend to continue for some time.
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