Image source, Getty Images
- author, Mitchell Labiak
- role, Business reporter
-
Chipmaker Nvidia Inc. became the world’s most valuable company on Tuesday after its shares rose to an all-time high.
It’s currently worth $3.34 trillion (£2.63 trillion), having almost doubled in price since the beginning of this year.
The company’s shares rose 3.5 percent to close at nearly $136, giving it a larger market capitalization than fellow tech giant Microsoft, which overtook Apple earlier this month.
The California company’s rapid growth has been driven by its dominance in chips needed for artificial intelligence (AI), which analysts have called “tech’s new gold, or oil.”
Speaking at the Copenhagen event, Chris Penrose, Nvidia’s global head of communications business development, said the record valuation marks the culmination of more than 30 years of work in computing and AI.
He also predicted further growth for the sector.
“The generative AI journey is bringing real transformation to enterprises and telcos around the world,” he said.
“We’re just getting started.”
Analysts at Wedbush Securities agree.
“Over the next 12 months, the race to reach $4 trillion in market cap in tech will likely be between Nvidia, Apple and Microsoft,” the company said in a note earlier this week.
But other commentators question whether Nvidia can realize big profits in the future, given the increasing competition it faces.
Rise and rise
But there’s no doubting how impressive its growth has been.
Eight years ago, this stock was worth less than 1% of its current price.
At the time, Nvidia’s value came from competing with rival AMD to make the best graphics cards.
But in recent years, the company has benefited from surging demand for chips that train and run generative AI models, the best known of which is OpenAI’s ChatGPT.
The company also benefited greatly from a surge in graphics card sales in 2020 due to the Bitcoin mining rush.
The tech giant’s growing success is reflected in the growing profile of its president, Jensen Huang.
The 61-year-old electrical engineer is sometimes called the “Taylor Swift of tech” because of his celebrity status.
Competition among AI developers is fierce: Microsoft, Google parent Alphabet, Meta and Apple are just some of the tech giants vying to create world-beating products.
This race benefits Nvidia, which develops its own AI technology and dominates most of the AI chip market.
In recent years, Nvidia’s revenue and profit figures have exceeded many analysts’ expectations.
After its latest financial statements were released in May, Quilter Cheviot technology analyst Ben Ballinger said the company had “again cleared a very high hurdle.”
“Demand is also showing no signs of slowing down,” he added.
But a minority are more cautious.
In February, Barclays credit analyst Sandeep Gupta argued that Nvidia’s large market share will be hard to maintain given the rise of rivals, and questioned how Nvidia’s customers would monetize its AI software.
