Nvidia briefly overtook Microsoft to take the top spot as the world’s most valuable company earlier this month.
But shortly after, the stock of Nvidia went through an unpleasant four-day drop, wiping off $431 billion in market value.
The AI tech company, which was just the week before the most valuable corporation in the world, is now valued at $2.9 trillion, placing it third after Apple and Microsoft in terms of market capitalization.
However, with just one good day of trading, its shares rise again, and it could soon join Microsoft and Apple as the world’s top three companies and the only ones with a market cap of $3 trillion or more.
Gains on stocks aren’t always restricted, even if a business breaks a market-cap record or becomes the largest in the world.
For instance, when Apple became the first trillion-dollar business in history in August of 2018, it was truly amazing. It did appear at the time that the growth would not be sustained. After all, the company’s rise to a trillion-dollar valuation took 42 years.
But in August 2020, after two years, the company’s market capitalization surpassed $2 trillion, and in June 2023, it reached a $3 trillion valuation.
Investors would have lost out on the stock doubling over the following five years if they had believed that Apple’s $1 trillion market valuation was the company’s near-term peak.
Therefore, if the company can continue to act correctly and in the right direction, there is definitely a recent historical precedence for Nvidia’s stock to continue rising to new heights.
Without a question, Nvidia has benefited the most from the current artificial intelligence (AI) revolution, which is seeing businesses scramble to incorporate AI features. Large language model (LLM) training and AI inference are facilitated by its GPU clusters, which are the cornerstone of its GPU architectures. These designs now power AI in the data center.
Due to Nvidia’s success, competitors and buyers have attempted to gain traction in the AI chip market. Nonetheless, thanks to its Compute Unified Device Architecture (CUDA) software platform, Nvidia maintains an estimated 80%+ market share.
Developers were trained to program GPUs using Nvidia’s CUDA software long before AI became the rave of the moment, which helped establish it as the industry standard. As a result, the company now has a sizable share of the market.
Since AI is still in its infancy, there has been a constant need for Nvidia’s products. The company’s remarkable revenue growth is evident, as seen by its most recent quarter’s 262% increase in revenue to $26 billion. Its largest growth engine has been sales into data centers, with revenue rising 427% to $22.6 billion in the most recent quarter.
Keeping up with demand is currently the only thing preventing Nvidia from making even more money; the company had noted that demand for its newest processors had exceeded supply.
