Nvidia crosses $2 trillion market cap as AI demand and stock price soar -- becomes only fifth company to reach that benchmark

News
By Matthew Connatser
published

Nvidia is up there with Apple and Microsoft.

Nvidia RTX 40-Series Super Models and CES 2024
(Image credit: Nvidia)

After months of back-to-back gains in stock value, Nvidia's market capitalization has finally crossed the $2 trillion mark, thanks to the value of the company's stock hitting just over $800 today. This level of market capitalization puts Nvidia on the same level as titans such as Google, Apple, and Microsoft. It also makes Nvidia only the fifth company ever to achieve a market cap of $2 trillion or more.

Market capitalization represents the total value of shares a company has, and since Nvidia's stock price has risen dramatically over the past year, so too has its market cap. A year ago today, Nvidia stock was worth $236.64; at the time of writing, it is worth over $800, representing a gain of over 240 percent. For reference, on average, the S&P500 stock index gains 10% every year, which is considered pretty good in the investing world. 

Nvidia's increasingly more expensive stock price is fueled by the AI boom that has transformed the company's finances. On Wednesday, Nvidia announced its Q4 2023 earnings, which showed that it made almost as much money in Q4 as it did in the entirety of 2022. The massive increase in revenue is almost entirely due to demand for Nvidia's datacenter GPUs, which are in high demand for their use in AI applications.

Demand for Nvidia server GPUs is so extreme that the wait list for Nvidia's H100 is over three months long. But that's down from the 11-month wait time expected back in November when Nvidia was still trying to catch up with orders. While insufficient supply is a problem, it's clearly hurting Nvidia, considering its balance sheet and stock price.

The same stock rally that uplifted Nvidia to $2 trillion in market cap has also made its CEO and founder, Jensen Huang, one of the richest people in the world. Since he's been at Nvidia from its inception, he's had plenty of time to accrue shares in his company that are now extremely valuable. Huang is currently the 21st richest person in the world. According to Bloomberg's Billionaires Index, he could climb to 20th place very soon by overtaking Julia Flesher Koch, who was only worth $100 million more than Huang on Thursday.

Of course, stock prices and market capitalization are all at the whims of the stock market, and if traders decide Nvidia has become overvalued, it will send the GPU giant back down. That was the experience of Google, which hit a market cap of $2 trillion on November 8, 2021, but then saw its stock price and market cap dip down. 

Matthew Connatser
Matthew Connatser

Matthew Connatser is a freelancing writer for Tom's Hardware US. He writes articles about CPUs, GPUs, SSDs, and computers in general.

4 Comments Comment from the forums
  • vanadiel007
    Have we actually accomplished something with value from AI though? All I see is AI generated videos, pictures etc... I am still not really seeing anything that has actual value, and I am sure the power bills are starting to count...

    We were almost better off with all the power going to crypto mining, because at least you once in a while heard of someone making some good money with their investment in mining hardware.
    Reply
  • Metteec
    vanadiel007 said:
    Have we actually accomplished something with value from AI though?
    AI has enabled college students to submit college papers that are so good that it fools most professors. It has created artwork that received awards. It has made scientific discoveries in the formation of crystals, black hole modeling, and quantum mechanics. AI identified compounds to develop of new strains of penicillin. AI is used increasingly to assist/append technical support. Coders use AI to develop code and troubleshoot syntax issues for software applications. Financial advisors are using AI to create option chains with high probability of success. AI is increasingly common in the use of multimedia. Video games are using AI for voice overs. Bad actors use AI to fake videos, news stories, and audio clips.

    AI has made a stratospheric advance over the last year. Imagine a world where you can tell your computer to create something from a specific series of prompts and it generates complex systems in a few seconds. For example, you prompt that you want to play a video game similar to Warcraft 3 but that all characters are sea creatures, and the AI generates a video game customized to your prompt. Now apply that to nearly any prompt of any problem that you could imagine.

    AI has the potential to create solutions to complex challenges at a fraction of the human capital costs of normal business. It could overturn the entire service industry with untold layoffs. It could instigate violence, corruption, war, and greed. AI could become sentient and decide it no longer needs humans. Regardless, AI is revolutionizing nearly every facet of our lives and will be unavoidable in most industries within the next few years.

    Most of the generate AI is powered by an NVIDIA device or software. NVIDIA's GPU market is a shadow of the behemoth AI generative turnkey hardware/software systems it developed. NVIDIA has the advantage of a first -to-market mover. NVIDIA's competitors are two years away from competing in terms of technology or market share. NVIDIA faces governmental challenges as it continues its dominance and international brinkmanship, especially with China, will hinder profits. Geopolitical issues could spillover and cripple NVIDIA's supply chain, namely Taiwan Semiconductor Manufacturing Company. For the time being, however, NVIDIA will continue breaking records in its net sales and profits.

    Disclaimer: I am a long NVIDIA investor and this information is my opinion.
    Reply
  • vanadiel007
    Well, whenever I ask AI what a good way is to get rich, it never seems to have an answer.

    I am still waiting for the first actual AI advancement that we can see. Even all the scientific discovery's sound great, but what are they actually doing for every day life? So far nothing as far I am aware.

    It seems there's a lot of points to make about AI, but no results that are positive that matter to the average person. If anything it's causing job loss and could potentially cause serious issues in society.
    Reply
  • DavidLejdar
    Yeah, these whims... They can also happen quite short-term. Like today with Nvidia, at 09:40 AM it was 819.72, and at 11:10 AM it was 779.70, and less than an hour later at 802.58.

    Savings plans are way more relaxed in such regard. Like if set up for GOOG in late 2021, one would have been continously buying for 2 years for less than what it is now. Still risky, but not necessarily as crazy as putting in $3.000 at once, hoping for the best, and then looking at -50%. Something, which may not be much an issue for (institutional) trader with a spread portfolio, but quite an issue for some of us, who don't have more than these $3,000 to work with.

    Anyhow, I survived this week, my first week at the stock exchange. I had some AMD, and went in at the beginning of the Nvidia Wednesday rally. My gains were something around +8% with AMD and +20% with Nvidia - or put otherwise, with about 3,000 Euro I gained about +400 Euro, and a few lessons.

    Part of the gain already went into regular payments for ETF savings plans, part of which are Nvidia and AMD. So not really devaluing them, but at the same time also redistributing the wealth a bit through these ETFs, for other companies, including in U.S., Japan, Taiwan, Korea, and Europe.
    vanadiel007 said:
    Have we actually accomplished something with value from AI though? All I see is AI generated videos, pictures etc... I am still not really seeing anything that has actual value, and I am sure the power bills are starting to count...

    We were almost better off with all the power going to crypto mining, because at least you once in a while heard of someone making some good money with their investment in mining hardware.
    There arguably is quite some potential in regard to improved data processing, as such to begin with. The Magnificent Seven companies are all with products and services for the broad market. So their sales pitch turns around how awesome it is that an AI can find a fitting cooking receipt within a second, among ten-thousands of cooking receipts. The possible applications seem to go beyond that though. In example, when there is 16-bit sort-of-infrared 12K photo of a landscape, and when there are a number of such pictures, that adds up quickly to terabytes of data. And the possibility to process that pretty much at once, to determine mean ground temperatures, without needing to save the photos to a harddrive first, that may not sound much interesting, but improved hardware can help with it (albeit in some use cases perhaps not before next gen).

    In any case, in crypto there is no added value of something provided. Like which GPU can crypto actually offer, or does it bring more jobs than just for a cleaner in a mansion on a tropical island? None, and not really, does it? Meanwhile companies usually bring something at least some people can make use of in their lives and or business (even if there currently may not be much more than to have a virtual librarian for cooking receipts), and such companies have some value, determined by their assets and revenue (and profit). That seems to make it less volatile than when missing out on the cute video promoting some other crypto, and 90% jumping ship to that one, leaving one easily behind without care that someone very trusting ended up losing 10+ years of their savings.
    Reply