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Nvidia's Market Capitalization Reaches $1 Trillion

May 30, 2023
minute read

Nvidia (NVDA) made history as the first chipmaker to achieve a market valuation surpassing $1 trillion, albeit briefly. During the trading session, Nvidia's stock rose by over 5%, reaching a high of $401.11 before experiencing a slight dip. The company's market cap stood at $992 billion at the close.

Based in Santa Clara, California, Nvidia joined the elite club of companies with trillion-dollar valuations, alongside industry giants like Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), and Apple (AAPL).

Nvidia recently unveiled a range of new AI-centric products, including a high-powered supercomputer and a platform that leverages generative AI for video game development. This move further solidifies Nvidia's position at the center of the AI craze, fueled by its powerful graphics cards and server products.

The impressive performance of Nvidia's stock this year is noteworthy, with a remarkable surge of over 165% since the start of 2023. The company's earnings results exceeded expectations, leading to a surge of more than 26% in the stock price following the announcement.

Industry analysts view Nvidia as a key player in the AI realm, with Raymond James managing director Srini Pajjuri stating, "There's a war going on out there in AI, and Nvidia today is the only arms dealer out there. So as a result, we're seeing this huge jump in revenues."

Nvidia has set high revenue expectations, with projected revenue of $11 billion, plus or minus 2%, for the second quarter. This far surpasses the market consensus of $7.2 billion.

Despite the impressive performance and positive outlook, Nvidia faces challenges. The company must keep up with the increasing demand, as competitors like AMD and Intel race to develop their own AI offerings. Additionally, ethical considerations arise regarding the responsibility of vetting AI products that utilize Nvidia's chips.

With a market value more than eight times that of Intel, Nvidia's position in the market is strong. However, sustaining the lofty valuation and justifying it in the long run poses a challenge. Geir Lode, head of global equities at Federated Hermes, referred to the recent leap in Nvidia's share price as "an astonishing surprise even to techno-optimists."

While some investors remain bullish on the stock, Ark Invest founder Cathie Wood expressed concerns about the valuation, stating that Nvidia is priced ahead of the curve.

Nvidia's achievement demonstrates its pioneering role in the AI revolution, and market participants anticipate continued growth as the AI landscape expands.

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