By Emmanuel Ogbodo
Nvidia (NVDA) has achieved a significant milestone by joining the exclusive $3 trillion market cap club, becoming only the third company to reach this mark after Apple (AAPL) and Microsoft (MSFT). The stock surged by 5% yesterday, propelling Nvidia ahead of Apple to become the second most valuable company in the US stock market, with Microsoft maintaining its lead.
Wednesday’s rally in Nvidia’s stock was part of a broader uplift in tech shares. The rise was fueled by softer US economic data and a drop in Treasury yields, which bolstered sentiment that the Federal Reserve might lower interest rates as early as next month.
Nvidia has become a key figure in the AI sector, especially since the launch of OpenAI’s ChatGPT in late 2022. The company’s stock has seen remarkable growth, with a 140% increase this year and a 200% increase over the last year. Over the past five years, Nvidia shares have risen by more than 3,300%, vastly outperforming the Nasdaq’s returns of 14%, 29%, and 126% over the same periods.
This week’s rally was partly driven by CEO Jensen Huang’s announcement of upcoming products. Nvidia plans to launch Blackwell Ultra, a more powerful version of its Blackwell chip, in 2025, and an AI chip platform called Rubin in 2026, with an Ultra version of Rubin slated for release in 2027.
Nvidia is a crucial partner for tech giants like Amazon, Google, Meta, Microsoft, and Tesla, providing hardware for their cloud-based AI solutions. In the first quarter of the year, Nvidia reported adjusted earnings per share of $6.12 on revenue of $26 billion, representing increases of 461% and 262%, respectively, compared to the same period last year. The company’s Data Center revenue surged by 427% to $22.6 billion, making up 86% of its total revenue for the quarter. Meanwhile, its gaming segment posted $2.6 billion in revenue.
Nvidia has also announced a 10:1 stock split effective June 7 and an increase in its dividend by $0.04 per share to $0.10 per share.
Despite Nvidia’s dominance, other players like AMD (AMD) and Intel (INTC) are also vying for a share of the AI chip market. AMD has announced that its MI325X and MI350 AI chips will be ready in 2024 and 2025, respectively, with the next-generation MI400 AI accelerator expected by 2026.
Nvidia’s remarkable rise and strategic plans underscore its pivotal role in the tech industry, particularly in AI, and its continuing influence on the market.
