Nvidia, the tech juggernaut renowned for its exceptional performance, has ascended as a prominent player in the global investment realm. Following a declaration by Elon Musk regarding his AI venture, xAI, necessitating 100,000 semiconductors from Nvidia for a supercomputer build, the company’s shares surged to unprecedented levels, solidifying its pivotal position in the burgeoning AI domain.
Breaking barriers, Nvidia has entered the league of US corporations commanding market capitalizations exceeding $1 trillion, aligning itself with tech behemoths such as Microsoft, Apple, Alphabet, Amazon, and Meta Platforms. With a market capitalization of $2.87 trillion, Nvidia is swiftly narrowing the gap with Apple, which currently leads with a valuation of $2.91 trillion. At the apex sits Microsoft, boasting an impressive $3.19 trillion market cap, while Meta Platforms trails with a valuation of $1.20 trillion.
The staggering surge in Nvidia’s stock price has left many astounded, save for those who positioned themselves early. Cory Mitchell, an analyst at Trading.biz, notes, “NVIDIA Corporation (NVDA) traded below $115 in October of 2022. The stock closed at $1,139.01 on May 28, a nearly 10-fold increase in about 20 months. The stock continues to rally, up 20% since the eve of May 22 when the company beat earnings expectations. Analysts expected $5.60 in profit per share for the quarter and posted standardized earnings of $5.98. They also beat revenue estimates by nearly 6%.”
This remarkable performance has not gone unnoticed by Indian investors. Viram Shah, CEO of Vested Finance, observes, “A 9% increase in Nvidia’s stock on May 23, accompanied by a sixfold surge in trading volume and a tripling of the number of traders compared to the previous week’s daily average. Approximately 10 crore INR worth of Nvidia shares were traded, reflecting significant market interest.”
The bullish sentiment pervading the market extends beyond Nvidia, encompassing the ‘Magnificent 7’—Apple, Microsoft, Nvidia, Amazon, Meta, Tesla, and Alphabet—following the resounding success of the FAANG stocks.
José Torres, Senior Economist at Interactive Brokers, highlights Nvidia’s exceptional quarterly performance, with revenue more than tripling year over year (y/y) and data center sales witnessing over 400% growth. Torres notes, “While its earnings and revenue exceeded analyst consensus expectations, Nvidia’s explanation that customers are generating profits from artificial intelligence eased investors’ concerns that the new technology could be more fluff than stuff.” CFO Colette Kress elaborates on Nvidia’s customer-centric approach, affirming that customers can yield immediate and substantial returns on their tech investments. Notably, customers can generate $7 in revenue over four years for every dollar spent on Nvidia’s HDX H200 server, utilized for accessing Meta’s AI.
Nvidia’s meteoric ascent, coupled with the formidable performance of the ‘Magnificent 7,’ underscores the dynamic and evolving landscape of global tech investments.
