Nvidia Passes Microsoft as Most Valuable Public Company

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Facts

• Chip-maker Nvidia on Tuesday passed Microsoft to become the world's most valuable public company, based on data from S&P Global — an ascent fueled by a boom in generative artificial intelligence (AI) and greater demand for the company's chips.¹
• The California-based company's value has nearly doubled since the start of the year, with it now worth $3.34T.²
• Stock in Nvidia, which passed Apple for second-most valuable company earlier this month, ended Tuesday trading at almost $136 per share.²
• Some of Nvidia's competitors saw an overnight rise in their share price on Wednesday, with Taiwan Semiconductor Manufacturing Company enjoying a 4% increase and South Korean chip makers Samsung and SK Hynix benefiting from increases of 3% and 7%, respectively, during trading hours.³
• Nvidia, just the 12th US company since 1925 to reach the top spot in market value on a closing basis, has earned enough to support its high stock price — as revenue more than tripled to $26B in the last quarter and its net income increased seven-fold to $14.9B.⁴
• Nvidia, founded in 1991, was known mostly for making chips for gamers to run 3D titles during its first couple of decades in business. It now has approximately 80% of the AI chips market used in data centers, buoyed by the current AI boom.⁵

Sources: ¹New York Times, ²BBC News, ³Forbes, ⁴Reuters.com and ⁵CNBC.

Narratives

• Narrative A, as provided by Sky News. Nvidia's large bet on AI has paid off. Sure, the company benefited from some luck — and it will face stiff competition moving forward — but it took foresight to expand from a video game-focused company to working with other industries, including car manufacturers, to eventually becoming the chip maker everyone in AI is turning to during this boom. Nvidia's high perch has been well-earned.
• Narrative B, as provided by Wsj. Nvidia seems to be doing everything right while being in the right spot at the right time. But in addition to an increase in competition that's right around the corner, Nvidia's popularity among investors has all the makings of a classic inflating bubble. Eventually, every bubble bursts, and in this case, investors and an entire industry could take a hit. We should slow down before identifying Nvidia as the most important company on the planet.

Predictions