The skyrocketing growth of Nvidia is not just turning heads; it’s unprecedented as well.
It took five years for Microsoft – the world’s most valued company now – to increase its market cap from $1 trillion to $3 trillion. Apple also took almost the same time to triple its market cap, from $1 trillion to $3 trillion. But you may be surprised to know that chipmaker Nvidia achieved the same feat within just one year! From a $1 trillion market cap in May 2023 to cross $3 trillion in June 2024!
Nvidia Corp. (NASDAQ: NVDA), the world’s most valuable semiconductor firm, has now transformed into the world’s second-most valuable company, with a market capitalization of $3.011 trillion. On June 5, 2024, Nvidia share rose 5.2%, closing at an unprecedented high of $1,224.40. This surge propelled Nvidia past Apple Inc. (NASDAQ: AAPL) in terms of market capitalization, a milestone not seen since 2002, when both companies were valued at less than $10 billion each.
In a breathtaking display of dominance this year, Nvidia has also surpassed tech behemoths Amazon ($1.886 trillion) and Alphabet ($2.177 trillion) in market cap.
The growth trajectory of Nvidia has been nothing short of remarkable. Within the span of just five months, the semiconductor firm’s market capitalization doubled from $1.5 trillion in January 2024 to over $3 trillion. This exponential surge follows a period of phenomenal growth in 2023, during which Nvidia’s market cap more than tripled. Notably, it was in May 2023 when the company crossed the significant milestone of reaching its first $1 trillion market cap.
What’s more surprising is that despite trailing Microsoft (NASDAQ: MSFT) in terms of market cap, Nvidia’s share price is nearly threefold higher.
Microsoft, the world’s most valuable company with a market cap of $3.151 trillion, has witnessed a YTD share price growth of 14.33%, settling at $424.01 on June 5. On the other hand, Nvidia’s year-to-date (YTD) share price has skyrocketed by an astounding 154.19%, surging from a modest $481.68 in January to a staggering $1,224.40 in June. This substantial increase reflects strong investor confidence and robust demand for Nvidia’s products and technologies.
Meanwhile, Apple’s YTD share price increased 5.51% to $195.87 at the time of market close on June 5.
Now, let’s take a look into the factors contributing to the Nvidia stock surge in recent years!
What’s Driving Nvidia Stock Price
It’s noteworthy that Nvidia, once primarily recognized for its graphics processing units (GPUs) in gaming, is also the world’s first and only computer chip company to achieve a trillion-dollar market cap.
- Leaders in Gaming: Nvidia’s graphics division remains a dominant force in the gaming industry. With the increasing demand for high-resolution gaming experiences, Nvidia’s gaming GPUs, such as the GeForce RTX 4070, have become essential for enhancing gaming performance.
- Dominance in AI and ML: The company has successfully expanded its offerings into other sectors, particularly artificial intelligence (AI) and machine learning (ML). The demand for Nvidia chips to power AI and ML tasks has increased worldwide. Major tech giants like Meta Platforms, Alphabet, Amazon, and Microsoft are among the eager buyers of Nvidia’s AI-enabling GPU chips. These chips, such as the A100 GPU, are in high demand for training AI models, including sophisticated models like ChatGPT.
- Influence in the Metaverse and VR/AR: Nvidia’s Omniverse platform and advanced 3D modeling programs have played a pivotal role in shaping the metaverse and the landscape of virtual and augmented reality (VR/AR). As the metaverse continues to evolve, the demand for Nvidia chips to power immersive digital experiences remains on the rise.
- Presence in Automotive Industry: Nvidia’s technology is also prevalent in the automotive industry, powering advanced driver-assistance systems (ADAS) and autonomous vehicles. This presence in the automotive sector contributes to the company’s overall growth prospects.
- Commitment to Innovation: Nvidia’s commitment to innovation and continuous product development has enabled it to stay ahead of the competition. The introduction of new GPU architectures, such as the next-generation Blackwell GPU chip, demonstrates Nvidia’s dedication to delivering cutting-edge technology to meet evolving market demands.
Blackwell GPU is expected to surpass its predecessor, the H100, and generate data centre revenue of $200 billion by the end of Nvidia’s fiscal year 2026.
All the above factors have collectively contributed to Nvidia’s mind-boggling financial performance. The company’s global revenue surged a massive 262.12% YoY and 17.8% QoQ to $26.04 billion in Q1 FY25, which ended on April 28, 2024. Interestingly, a majority of Nvidia’s revenue came from the Data Center segment.
Nvidia’s Data Center revenue grew an impressive 23% QoQ, and an astounding 426.68% YoY in Q1 FY25, amounting to a record $22.56 billion. This unprecedented performance was fueled by the sustained strong demand for the NVIDIA Hopper GPU computing platform.
Furthermore, Nvidia’s net profit for the first quarter of fiscal 2025 reached $14.88 billion, a noteworthy increase of 21.1% QoQ and 628.4% YoY.
Nvidia’s CEO, Jensen Huang, has been crucial in steering the company through this transformative period. He has announced plans to upgrade Nvidia’s AI accelerators annually, ensuring the company remains at the forefront of AI technology.
Huang’s leadership has not only increased Nvidia’s market value but also significantly boosted his personal wealth by over $5 billion, bringing his net worth to $107.4 billion as of June 2024.
Nvidia: World’s First $10 Trillion Company?
With Nvidia’s exponential growth and relentless demand for its semiconductor chips, the company is poised to surpass Microsoft in the coming months. According to tech analyst Beth Kindig of I/O Fund, Nvidia’s stock is projected to surge by an impressive 258% from its current levels, reaching a staggering $10 trillion market valuation by 2030. In Kindig’s assessment, the Blackwell GPU will be instrumental in empowering trillion-plus large language models.
Kindig also emphasizes that Nvidia is at the forefront of capturing the burgeoning AI data center market, with estimates projecting its total addressable market to reach $400 billion by 2027 and soar to $1 trillion by 2030.
Regulatory Scrutiny
Despite its impressive growth, Nvidia is not without challenges. The U.S. Justice Department and the Federal Trade Commission (FTC) have reached an agreement to investigate the dominant roles of Microsoft, OpenAI, and Nvidia in the AI industry. The Justice Department will focus on whether Nvidia has violated antitrust laws, while the FTC will examine the conduct of OpenAI and Microsoft. This investigation highlights the growing antitrust concerns over the concentration of power within the AI sector.
As Nvidia continues to capitalize on the AI revolution, the company is poised to play a central role in the next industrial revolution. Nvidia’s $3 trillion market cap is a testament to its unwavering commitment to technological innovation and strategic investments across various industries.
