Nvidia has achieved a historic milestone by becoming the world’s most valuable company, surpassing tech giant Microsoft. This achievement highlights Nvidia’s critical role in the rapidly growing field of artificial intelligence (AI).
Milestone of market
Stock Performance
On Tuesday, Nvidia’s shares climbed 3.5 percent to $135.58, boosting its market capitalization to $3.335 trillion (roughly Rs. 2,78,15,901 crore). This surge came just days after Nvidia overtook Apple, positioning it as the second most valuable company. In contrast, Microsoft saw its market value drop to $3.317 trillion after a 0.45 percent dip in its shares. Apple’s market cap also fell slightly to $3.286 trillion due to a 1 percent decline in its stock.
AI Revolution
AI Dominance
Nvidia’s significant market value increase is a testament to its leadership in AI technology. The company’s high-end processors are in high demand as tech giants like Microsoft, Meta Platforms, and Alphabet (Google’s parent company) race to enhance their AI capabilities. This intense demand for Nvidia’s AI processors has been a major factor in its stock nearly tripling this year, outpacing Microsoft’s 19 percent rise.
Market dominant
Nvidia has become a key player on Wall Street, with an average daily turnover of $50 billion. This figure is significantly higher compared to other tech heavyweights like Apple, Microsoft, and Tesla, which each average around $10 billion. Nvidia now represents about 16 percent of all trading in S&P 500 companies, highlighting its dominant market position.
Investor Sentiment and Stock Trading
Wall Street
Nvidia’s remarkable rise has been a driving force behind the record highs in the S&P 500 and Nasdaq indices. However, some investors express concerns that the current AI-driven optimism might wane if there is a slowdown in AI spending. Despite this, Nvidia remains the most traded company on Wall Street.
Stock Valuation and Investor Caution
While Nvidia’s stock has reached unprecedented highs, some market analysts urge caution. Oliver Pursche, Senior Vice President at Wealthspire Advisors, warned that even a minor misstep by Nvidia could lead to a significant stock correction.
Future Prospects and Challenges
Demand and Supply Constraints
Nvidia’s executives have projected that the demand for their Blackwell AI chips will exceed supply well into the next year. The company’s consistent ability to exceed Wall Street’s expectations for revenue and profit underscores its strong market position. Despite the rapid growth, Nvidia’s stock valuation has seen a decline, trading at 44 times expected earnings, down from over 84 times a year ago.
Stock Split
In a move to make its highly valued stock more appealing to individual investors, Nvidia recently executed a 10-for-one stock split, further boosting its market appeal.
Conclusion
Nvidia’s ascent to the top of the global market cap rankings underscores the company’s pivotal role in the AI revolution. With its advanced AI processors in high demand, Nvidia continues to set new benchmarks in the tech industry. However, investors are advised to approach with caution due to potential market volatility.
