The AI boom has made chip company Nvidia the most valuable company on the stock market. Nvidia had a market value of more than 3.33 trillion dollars (approximately 3.1 trillion euros) on Tuesday, overtaking software giant Microsoft.
With its rise to the top, Nvidia shares are the stock with the best price performance of the past 25 years, as calculated by the financial service Bloomberg. Since the IPO in 1999, the value of the share has increased by no less than 591,078 percent, including reinvested dividends, according to Bloomberg figures.
Lately, it has been shown time and again that the demand for software with artificial intelligence is causing Nvidia’s business to grow explosively. In the last quarter alone, there was a year-over-year increase in revenue of 262 percent to $26 billion. At the same time, quarterly profit shot up from two to almost $15 billion.
Only the beginning
And 61-year-old company boss Jensen Huang, co-founder of Nvidia and charismatic showman, promises that this is just the beginning of a computing revolution. Huang is confident that in the future, most content will no longer be prefabricated from memory, but AI software will generate it freshly based on the current situation. For example, you can talk to construction technology via a chatbot instead of looking at data somewhere.
Nvidia is preparing for this future with a new generation of chips called Blackwell. For example, with the current Grace Hopper system, the chatbot ChatGPT could have been trained in three months with 8,000 Nvidia chips and a power consumption of 15 megawatts, Huang said. Blackwell can do this with 2,000 chips and four megawatts of electricity.
Collaboration with HP
If Huang is correct in his vision for the future, this would mean even more revenue for Nvidia. And investors’ belief in this is one of the driving forces behind the stock’s recent rise. The newspaper is currently worth about ten times what it was in September 2022. Huang himself rose to twelfth place on Bloomberg’s ranking of the world’s richest people with an estimated fortune of $115 billion.
The Nvidia share price jump of more than 3.5 percent on Tuesday was preceded by the announcement of a collaboration with the computer group Hewlett Packard Enterprise for technology for the use of AI in companies. In after-hours trading, Nvidia shares rose another 0.6 percent.
Demand exceeds need
The Silicon Valley website ‘The Information’ also reported on Tuesday that Huang is now concerned that major customers such as AWS and Microsoft are buying more Nvidia chip systems than can currently fit in their data centers. To ensure that there is no oversupply on the market later, buyers must prove now that they have sufficient capacity.
On Tuesday, after a slight decline in its stock price, Microsoft had a market value of $3.317 trillion, while Apple was worth $3.286 trillion.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
