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Chipmaker Nvidia reached an all-time high in its share price on Tuesday, making it the most valuable corporation in the world.
After virtually doubling in value since the beginning of the year, it is currently valued $3.34 trillion (£2.63 trillion).
With a 3.5% gain, the stock closed the trading day at about $136, making it more valuable than Microsoft, another massive IT company. Earlier this month, it surpassed Apple.
What Made Nvidia World’s Most Valuable Company?
The Californian company's rapid ascent has been fueled by its dominance in the chips required for artificial intelligence (AI), which analysts call the "new gold or oil in the tech sector."
Nvidia's dominant position in the artificial intelligence (AI) space is largely responsible for its impressive market performance. With the importance of Nvidia's GPUs for AI technologies, the business finds itself in the heart of competition amongst the largest tech giants.
Based on LSEG data, Nvidia has emerged as the most traded business on Wall Street, with an average daily turnover of $50 billion, compared to roughly $10 billion for Apple, Microsoft, and Tesla (TSLA.O). Currently, the chip manufacturer represents roughly 16% of total S&P 500 company trading.
To take the lead in this emerging industry, major corporations like Microsoft, Meta Platforms, and Alphabet (the parent company of Google) are all enhancing their AI computer capabilities.
Jensen Huang: Taylor Swift of tech
Jensen Huang, the company's CEO, has become more well-known, mirroring the rise and rise of the IT powerhouse. His net worth jumped by more than $4 billion, making him the 11th richest person in the world. Jensen is currently richer than India’s richest person Mukesh Ambani, but just slightly behind former Microsoft CEO Steve Ballmer.
Given his level of popularity, the 61-year-old electrical engineer—who is well-known for wearing his signature leather jacket—was even dubbed the "Taylor Swift of tech" by Meta CEO Mark Zuckerberg.
Nvidia's Meteoric Rise
Source: Bloomberg
The fact that it has grown so phenomenally is undeniable. The stock's value eight years ago was less than 1% of what it is today.
The rivalry between Nvidia and AMD in producing the greatest graphics cards at the time was the reason for Nvidia's bloom in the past. However, it has profited recently from a surge in demand for processors that execute and train generative AI models, the most well-known of which is ChatGPT from OpenAI.
In 2020, the company profited greatly from a surge in sales of its graphics cards caused by the rush to mine Bitcoin.
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Can Nvidia Maintain Its AI Market Dominance?
There is a lot of competition among AI developers. Tech giants like Apple, Microsoft, Alphabet, which owns Google, and Meta are competing to produce a product that can compete globally.
As it develops its own AI technology and controls the great bulk of the AI chip market, Nvidia stands to gain from this competition.
In recent years, Nvidia has outperformed numerous analyst projections in terms of sales and profit metrics.
According to Ben Barringer, a technology analyst at Quilter Cheviot, the company "once again cleared a very high hurdle" in May, following the release of its most recent set of financial data.
Some people are more cautious, though. Sandeep Gupta, a credit analyst at Barclays, stated in February that Nvidia's substantial market share would be difficult to sustain in light of the growing number of competitors and questioned how Nvidia's clients would profit from the AI software.