Nvidia surpasses Apple and Microsoft in market capitalization, becoming the most valuable company in the world thanks to the rise of artificial intelligence (AI).
The actions of Nvidiasupported by the artificial intelligence (AI)rose 3.5% on Tuesday to $135.58 per share, raising their market valuation to 3.34 trillion dollarssurpassing a Apple y Microsoft to become the most valuable company in the world. Microsoft is now in second place, with a valuation of $3.32 trillion, followed by Apple, with $3.28 trillion.
The price rise was sparked by news that the chipmaker could secure a 20% weighting in the S&P 500 Technology Select Sector (‘XLK’) fund ‘SPDR’ based on valuation standards. This could mean the acquisition of more than 10 billion dollars of shares of Nvidia by the exchange traded fund ‘ETF’.
He stock price from Nvidia has up 12% since its 10-for-1 stock split began trading on June 10thand has up 170% so far this year, while Microsoft shares are up 20% and Apple shares are up 15% this year. Its shares have skyrocketed by approximately 591.000%since the company went public in 1999.
Nvidia has become the company that has benefited the most from AI since 2023thanks to its advanced graphics processing units (‘GPU’), specialized in supercomputing what support generative AI training. Its revenue nearly quadrupled in the fiscal first quarter of 2024.
The company occupies a monopolistic position in AI chip manufacturing, with approximately 80% market share. Among its clients are the main technological players, such as Microsoft, Amazon, Meta Platforms, Alphabet y OpenAI. CFO Colette Kress revealed that approximately 45% of Nvidia’s data center revenue came from these cloud vendors. cloud.
Nvidia has launched a new AI graphics processing unit (‘GPU’) for supercomputing, Blackwellwhich is expected to be the spearhead of the company’s growth in the next year. CEO Jessen Huang also expressed his ambition to advance its product offering in various sectorsincluding internet companies consumptionlos car manufacturers and suppliers of healthcarerather than focusing solely on cloud businesses.
A look at Nvidia’s history
Nvidia was founded in 1993 a Sunnyvale, California (USA). Its CEO, Jensen Huang, is one of the three co-founders, who was the director of CoreWare and a microprocessor designer at Advanced Micro Devices (AMD). He main product of the company are its graphics processing units (‘GPU’), specialized electronic circuits designed to speed up the rendering of images and videos in the early years.
Instead of relying on strong sales revenue from your data center, Nvidia initially gained market share in the video game industry through deals with Microsoft’s Xbox in 2000 and Sony’s PlayStation in 2004. Nvidia entered the S&P 500 index in 2001. However, the dotcom bubble plunged its shares by almost 90% between January and September 2002 After several years of recovery, fueled by ‘GPU’ sales and the creation of the CUDA platform, Nvidia shares skyrocketed 635% from the end of 2004 to reach a peak in 2008, before the GFC occurred. .
CUDA, a parallel computing platform and programming model introduced in 2006, allowed Nvidia to enter the data center market taking advantage of Nvidia ‘GPUs’ to general computing tasks, crucial for AI and deep learning applications. Nvidia’s supercomputing chip sales were boosted once again by the cryptocurrency mining in 2017 and 2020. During the COVID-19 pandemic period, its gaming sector revenue soared, pushing its market valuation to overtake Intel.
Nvidia stock fell 67% from its peak in 2021 through October 2022, when the Fed began its aggressive rate hikes. However the AI frenzy started by Microsoft in 2023 made the sales of its advanced chips by AI they will shoot last year.
Is Nvidia overrated?
Nvidia has a price/earnings ratio of 78, the highest within the trillion dollar club of market capitalization. Meanwhile, its dividend yield is as low as 0.03%, marking it as a typical growth company. Nvidia you have to continue investing billions of dollars to maintain its market shareeither. Some analysts believe its market value could exceed $4 trillion in the near future.
With annual revenue growth of more than 200%, the Nvidia stock are considered reasonably valued. However, the company’s shares have risen too quickly, which could prompt a profit-taking moment.
