Nvidia Breaks 2 Trillion in Market Cap Value

Nvidia Breaks 2 Trillion in Market Cap Value

Nvidia had an excellent day, achieving $50 billion in market cap growth, and skyrocketed to 2.01 trillion dollars in value. Only three companies in the world had previously had a valuation above 2 trillion dollars. Saudi Aramco is the one Non-North American company to have such a valuation. And the two American companies are Microsoft, and Apple. 

Despite Microsoft’s long and heavily covered decline in popularity in comparison to Apple, it has remained comparably valuable over time, and in the past year has surpassed Apple in value to become the largest market cap stock in the world. 

How did it happen? The investment of 10 billion dollars in OpenAI by Microsoft in January of 2023 has thrilled investors. The possibility, not only for inventions powered by AI that are useful and valuable to consumers, but for the growth in overall business scale for Microsoft, is seemingly limitless. 

The enamoring power of ChatGPT has revolutionized Microsoft’s public image. It has reinstated them as developer of the future, and not just a relic of the past. 

The other major players in the North American technology sector, excepting Nvidia, are busy developing chips that will allow for AI to match the power of ChatGPT, as well at the power of Nvidia’s new chips.

Tesla has invested over one billion dollars in the development of an AI super-computer called Dojo. The super-computer will help to bring AI-powered autonomous driving systems to the next level. The issues with autonomous driving have been perhaps the biggest issue affecting Tesla’s valuation, and even their revenue, since their beginning. 

Despite the development of this computer, they presently rely on chips from Nvidia, including the A100, and will continue to rely on them in the future.

Amazon and Google are developing their own AI chips, with Google’s “Tensor Processing Units” being used to power cloud technologies, and more sophisticated AI search engines. 

Nvidia’s new h100 chip increases the amount of AI-power available by an exponential amount, over the previous a100 chips. These 40,000 dollar chips are shipped in armored vehicles, and essentially the solution for the number of A100 chips necessary to run super computers. These new models reduce the number of chips necessary by half, theoretically saving Nvidia’s customers billions, while making them the defacto leader of the industry.

The impact of the new chips has transformed Nvidia’s business. Previously a company based around the sale of Graphics cards, the company’s sales now center heavily around AI-chips. In the fiscal year of 2017, its gaming cards represented 53% of sales, while AI-units represented just 25% of sales. In the most recent fiscal year, gaming cards only accounted for 17% of sales, while AI-chips had risen to account for 78% of total Nvidia sales. 

With 61 billion dollars in sales in the last fiscal year, Nvidia is by far the lowest earning tech company in the top five market cap companies. It is evidence that the promise of AI as a major component of the future, has encouraged investors to be bull on Nvidia. Suffice to say, traders are betting on Nvidia.