By D. Maan, Jadetimes News
Nvidia Becomes the World's Most Valuable Company
Record Breaking Valuation
Chip maker Nvidia has ascended to the position of the world's most valuable company, following a surge in its share price to an all time high on Tuesday. The company is now valued at $3.34 trillion (£2.63 trillion), with its stock price nearly doubling since the beginning of the year. The stock closed the trading day at nearly $136, up 3.5%, surpassing tech giants Microsoft and Apple.
Driving Force, AI Dominance
Nvidia's meteoric rise is attributed to its leading role in producing the chips essential for artificial intelligence (AI), described by analysts as the "new gold or oil in the tech sector." Speaking at an event in Copenhagen, Chris Penrose, Nvidia’s global head of business development for telecommunications, forecasted continued growth in the sector, emphasizing the transformative impact of generative AI on businesses and telecommunications worldwide.
Future Prospects
Analysts at Wedbush Securities concur with this optimistic outlook, predicting a fierce competition among Nvidia, Apple, and Microsoft for the $4 trillion market cap over the next year. However, some commentators have raised concerns about the sustainability of Nvidia's gains due to mounting competition.
Spectacular Growth
Nvidia's growth trajectory has been nothing short of spectacular. Eight years ago, its stock was worth less than 1% of its current value. Initially, Nvidia's worth was tied to its rivalry with AMD in the graphics card market. In recent years, however, the company has thrived on the soaring demand for chips used in training and running generative AI models, most notably OpenAI's ChatGPT. Additionally, Nvidia saw a significant boost in graphics card sales during the Bitcoin mining surge of 2020.
Leadership and Celebrity Status
The company's ascent has been mirrored by the rising profile of its CEO, Jensen Huang. Meta CEO Mark Zuckerberg has even likened the 61 year old electrical engineer, known for his signature leather jacket, to the "Taylor Swift of tech" due to his celebrity status. Huang's popularity is especially notable in his native Taiwan, where he is treated like a rock star by fans, who pose for photos with him and even request autographs on body parts.
Why Nvidia's Boss is Dubbed the 'Taylor Swift of Tech'?
Competition among AI developers is fierce. Major tech players such as Microsoft, Alphabet (Google's parent company), Meta, and Apple are all striving to create a world leading AI product. This intense competition works to Nvidia's advantage, as the company not only develops its own AI technology but also dominates the majority of the AI chip market. Nvidia's sales and profit figures have consistently exceeded analyst expectations in recent years.
In May, following the release of Nvidia's latest financial results, Ben Barringer, a technology analyst at Quilter Cheviot, remarked that the company had "once again cleared a very high hurdle." He noted that demand for Nvidia's products shows no signs of diminishing.
However, some remain cautious about Nvidia's future prospects. In February, Sandeep Gupta, a credit analyst at Barclays, argued that maintaining Nvidia's large market share would be challenging due to the growing number of competitors. He also questioned how Nvidia's customers would effectively monetize AI software. Nvidia CEO Jensen Huang has earned the nickname the 'Taylor Swift of Tech' for his growing celebrity status, which parallels the company's impressive rise.