Nvidia has reached a significant milestone, surpassing Microsoft to become the world's most valuable public company, boasting a market capitalization exceeding $3 trillion.
On Tuesday, Nvidia's market cap hit an impressive $3.34 trillion, following a remarkable 170% surge in its share price this year. This achievement marks a more than nine-fold increase since the end of 2022, driven primarily by the booming generative artificial intelligence sector.
Nvidia's journey to the top was not without challenges. In its early days, the company faced a major setback when it failed to deliver 3D chips for Sega's new gaming console. However, Nvidia bounced back by developing the RIVA 128, the first consumer GPU to integrate 3D acceleration along with traditional 2D and video acceleration. This innovation not only salvaged the company's reputation but also established Nvidia as a major player in the tech industry.
The recent surge in Nvidia's value is largely attributed to the high demand for training chips essential for running generative AI models, such as OpenAI's ChatGPT. These advanced processors are at the forefront of the race to dominate AI technology.
Nvidia's exceptional rise in market value has become a symbol of Wall Street's enthusiasm for emerging AI technologies. The company has also been one of the most actively traded stocks, with daily turnovers averaging $50 billion, significantly higher than Apple's, Microsoft's, and Tesla's $10 billion turnovers, according to LSEG data. Nvidia now represents about 16% of all trading in S&P 500 companies.
The relentless demand for Nvidia's processors has strained the company's supply, with its AI chips being regarded as superior to those produced by competitors. Recently, Nvidia's stock traded at 44 times the expected earnings, enhancing its attractiveness among investors. Last week, the company conducted a 10-for-1 stock split.
Over the past year, Nvidia has consistently surpassed Wall Street's high expectations for revenue and profit, with the demand for its graphics processors outpacing supply. Company executives revealed in May that the demand for its Blackwell AI chips is expected to exceed supply well into the next year.
As Nvidia continues to innovate and lead in the AI sector, its position as the world's most valuable company underscores the transformative impact of artificial intelligence on the global economy.
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