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Number two
According to CNBC, Nvidia managed to surpass the $3 trillion mark on Wednesday, June 5, 2024, for the first time since its founding, after its shares rose 5% to close at $1224.* The rise in shares has put the chipmaker in second place, trailing only market leader Microsoft, which was worth $3,15 trillion as of the same date, and overtaking California-based iPhone maker Apple, with a capitalisation of $2,99 trillion. This remarkable milestone comes just a few months after it surpassed the $2 trillion market capitalisation it reached at the end of February this year.
Enormous growth with a positive outlook
The company's growth is driven not only by the confidence and enthusiasm of marketers, but more importantly by their cutting-edge AI products and the demand for them, as evidenced by the excellent economic results we posted about a couple of weeks ago, but also by the sharp rise in the stock. The value of the stock as of June 7, 2024, is $1210, a 212% year-over-year increase. 5 years ago, the share value was $42, which is a growth of over 2760% to the current value.* Several financial institutions have positive outlooks, with the common reason being the company's leadership position in the sector. Financiers at Mizuho Group have raised their forecast to $1275 from the previous $1180, and analysts at BofA Securities are projecting a target price of $1500. Analyst Louis Navellier of Navellier & Associates, in turn, has a positive outlook on the company's value and predicts that it will soon surpass even Microsoft's capitalization, reaching the $5 trillion level in the next few years.[1]
Source: Investing.com*
Impact on the Asian market
Adding to the positive market capitalisation news, chip manufacturing equipment maker ASML Holding's positive comments on the increasing demand for chips supported the growth of the Asian technology sector and its outlook for expansion. TSMC shares, Nvidia's main supplier, saw the biggest increase, while other suppliers such as Hon Hai Precision Industry and Foxxonn also grew. Other major chipmakers, such as Chinese Semiconductor Manufacturing International and Will Semiconductor and Japanese Advantest Corp and Tokyo Electron, grew along with them.
New chips every year
The increase in market value was preceded by the launch of the next generation of AI chips, called Rubin. The chips, which were unveiled just three months after the introduction of the Blackwell superchip, will include new GPUs needed to train and deploy AI along with other upgrades. However, specific details have not yet been disclosed. According to Bloomberg, during a conference in Taipei, Taiwan on the first weekend of June, Nvidia CEO Jensen Huang spoke about the need to accelerate chip development with a plan to release them annually, with Rubin available in 2026 and Blackwell available for purchase as early as next year. Huang's further statement that those without AI skills will be left behind, highlights their plan to expand into every sector of the market at a time of fierce competition in the IA chip market, where competitors such as AMD, Intel and Microsoft and other tech giants are also vying for dominance.
Tesla purchases
Elon Musk also sees reliability in Nvidia's products, tweeting on the social network X that Tesla plans to purchase $3 billion to $4 billion worth of hardware this year, which is about two thirds of its planned $10 billion spending. Earlier reports referred to Musk's instruction to prioritize the supply of AI processors for his companies X and xAI over EV production, which could potentially delay Tesla's plans. Despite these adjustments, Musk confirmed the imminent completion of the Texas gigafactory, which will use 50 000 pieces of H100 chips to train self-driving technologies.
Conclusion
Crossing the $3 trillion valuation is a remarkable milestone in Nvidia's trajectory, driven by confidence in its cutting-edge products and strong economic performance and despite the efforts of competitors, the firm remains a key player in the chip and generative AI sector. The introduction of the new generation of Rubin chips only underscores the commitment to innovation, compounded by ambitious plans to release new versions of chips every year.
Sources:
https://www.cnbc.com/2024/06/05/nvidia-passes-apple-in-market-cap.html
https://www.cnbc.com/2024/06/05/nvidia-briefly-passes-3-trillion-market-cap-on-back-of-ai-boom.html
https://finance.yahoo.com/news/nvidia-touts-products-aimed-expanding-121033569.html
* Past performance data is not a guarantee of future results.
[1] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future results. Forward-looking statements, by their nature, involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted and actual developments and results may differ materially from those expressed or implied by any forward-looking statements.
Warning! This marketing material is not and should not be construed as investment advice. Past performance is no guarantee of future results. Investing in foreign currency may affect returns due to fluctuations. All securities transactions may result in both gains and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future results. InvestingFox is a trademark of the company CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.
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