Nvidia is rapidly closing in on joining an elite list of publicly traded companies with a market capitalisation of more than $1 trillion, as the tech company’s stock has soared more than 25% since it released a remarkably optimistic financial outlook Wednesday night outlining how the AI boom is driving chip demand.
Nvidia could reach $1 trillion in market capitalisation, joining a small list of companies.
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Key Takeaways
- Nvidia’s market cap is just over $950 billion as of Thursday afternoon, up a whopping $170 billion since the 30-year-old company released an earnings report Wednesday night that pushed its share price up 25.6% to $383.43.
- Nvidia’s earnings report estimated $11 billion in sales for the second quarter, more than 50% higher than analysts’ predictions.
- The company also reported $7.19 billion in revenue in the first quarter, $67 million higher than expected and up 19% from the previous quarter, and earnings per share were $1.09, $0.17 higher than expected and up 24% from the previous quarter.
- Nvidia, whose current market capitalization is just behind Amazon as the sixth-largest in the world, would be one of a handful of stocks to reach $1 trillion since Apple hit that bar for the first time in 2018.
- The other companies with market capitalizations surpassing $1 trillion are Apple ($2.7 trillion), Microsoft ($2.4 trillion), Saudi Aramco ($2 trillion), Google’s parent company Alphabet ($1.6 trillion) and Amazon ($1.2 trillion).
Tangent
Apple became the first U.S. stock to hit $1 trillion in 2018, and the first to reach $3 trillion in 2022. Tesla and Facebook’s parent company Meta briefly dipped above the $1 trillion mark, but have both fallen back around $600 billion. Meta was in the $1 trillion club for about three months in 2021, while Tesla has been in and out a couple times, most recently falling out in April 2022 after a poor quarterly report.
Key Background
The 30-year-old company is having its moment now largely thanks to artificial intelligence, which it mentioned 43 times in its earnings call on Wednesday. The company started out creating graphics process units (GPUs) for video games—but it turns out GPUs can also enable computers to learn without programmers, a key factor for developing generative AI called “deep learning.”
On Wednesday, Nvidia debuted a new family of GPUs that work at twice the speed of those previously available, making the company an “unquestionable AI leader,” according to a Bank of America report entitled “To $1tn and beyond.” This comes at a key moment for AI as OpenAI’s viral ChatGPT has garnered 100 million users and billions of investment dollars, including from Microsoft. Nvidia’s data center group reported a 14% annual increase in sales for the first quarter, which the company said was the result of increasing demand for GPUs from cloud and internet companies looking to train and deploy generative AI.
Forbes Valuation
Nvidia founder Jensen Huang’s net worth soared 25% to $34.5 billion as his company’s share price surged Thursday, making him the 36th-wealthiest person on earth according to Forbes‘ estimates. Other billionaires’ fortunes have risen and fallen in recent years as their companies approach the $1 trillion mark. When Tesla first surpassed a $1 trillion market cap in 2021, CEO Elon Musk became the first person in the world to surpass a $300 billion net worth, before later falling to $187.9 billion as of Thursday. Meanwhile, Amazon founder Jeff Bezos’ net worth soared in 2020 alongside his company’s share price.
This story was first published on forbes.com and all figures are in USD.
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