How Nvidia Took Over the World – and Where It Goes from Here
A new record share price of $136 has propelled Nvidia's overall market capitalisation above $3.3 trillion – more than the annual GDP of the UK.
Since January 1, 2024, Nvidia's value has risen by over $10 billion every single day. To put this into perspective, that growth is more than the current market cap of Reddit and exceeds Nvidia's entire worth just a decade ago. On Tuesday, the California-based company became not only the world's most valuable company but also the most valuable company ever.
The astonishing rise of the computer chip maker can be traced back to the release of ChatGPT in late 2022. This artificial intelligence chatbot brought large language models (LLMs) into the public eye for the first time, becoming the world's fastest-growing app as people realized AI's potential for everything from drafting work emails to offering travel tips.
Nearly every major tech conference and keynote since then has heavily focused on AI. For example, Google mentioned AI more than 120 times during its 110-minute developer event. This demand for AI has led to soaring demand for the chips that power AI.
For Nvidia, this AI boom coincided with a period of massive market dominance for its graphics processing units (GPUs), which are crucial for building and training powerful AI models.
In becoming the world's most valuable company, Nvidia surpassed major US tech companies, including Microsoft, Apple, and Alphabet (Google). While Nvidia's rise is due to the critical role of its chips in the AI market, some industry figures warn that its recent lack of competition may soon end.
As capital flows into the industry, several other startups and existing tech giants like Apple are entering the space and making their chips in-house. "Nvidia's relentless rise to the top illustrates a crucial point: powerful hardware is the foundation upon which the AI revolution is built," said Daniel Bathurst, head of product at AI cloud provider Nscale.
"As enterprises and startups bet big on AI, more players are entering this arena and catching up quickly. In this battleground for AI spend, constant innovation is king." However, while powerful chips are essential, the AI ecosystem requires a diverse range of hardware and software to support a thriving, sustainable AI landscape. Collaboration and diverse innovation in every infrastructure element will be crucial to unlocking AI's full potential.
The AI frenzy has also boosted other technology firms, with four of the top five most valuable companies now from the US tech sector. Nvidia's dramatic rise has attracted retail investors and drawn comparisons to pandemic-era meme stocks that saw similar meteoric gains followed by inevitable collapses.
Yet some analysts believe Nvidia could continue its rally, at least in the short term. Following a recent 10-for-1 stock split, Rosenblatt Securities analyst Hans Mosesmann increased the share price target for Nvidia from $140 to $200. This would take its market value close to $5 trillion.
"The real narrative lies in the software that complements all the hardware goodness," Mosesmann noted. "We anticipate this software aspect will significantly increase in the next decade in terms of overall sales mix."
