AI Boom Powers Nvidia to Unprecedented $4 Trillion Market Value

Nvidia made history by being the first publicly traded company to reach a whopping $4 trillion market capitalisation. The company reached that distinction on July 10 when Nvidia's stock closed at $164.10—up 0.75%—bringing the company's market cap close to $4.004 trillion. 

To put into perspective how remarkable this achievement was, it was just over two years ago that Nvidia passed the $1 trillion milestone in June 2023. In just 25 months since, Nvidia's value has quadrupled due to an unprecedented demand in high-performance chips for the artificial intelligence and data-centre markets.

AI Chip Dominance

Nvidia's dominance in AI hardware and its GPU-based Blackwell architecture, introduced in early 2024, have propelled it to extraordinary heights. Nvidia's chips serve as the backbone of next-gen AI data centers and are relied upon by tech giants like Microsoft, Amazon, Alphabet, and Meta to train language models and realize other AI projects.  

Robert Pavlik, a portfolio manager at Dakota Wealth, said that increased asset allocation toward AI "demonstrates a general acknowledgment for AI's fundamental role in the future of technology." Widespread industry sentiment has created a divide between Nvidia and its fellow tech giants.

Eclipsing Competitors

NVIDIA is now valued at $4 trillion, overtaking Microsoft at $3.73 trillion and Apple at $3.17 trillion. Analysts note that even with its astronomical valuation, Nvidia's stock trades at about 33 times forward earnings, below its five-year average of approximately 41, showing some market discipline in light of its impressive growth.

Navigating Risks and Opportunities

In spite of Nvidia's positive momentum, the company does have considerable headwinds. Export controls around its most sophisticated chips in the United States limit its potential growth into China and push the company to create a version of its "Blackwell-Lite" chip that is compliant with regulatory requirements. Jensen Huang is actively engaged with officials in China, and while that could present some good news for Nvidia, scrutiny of the company and its restrictions may also increase in the United States.

Additionally, analysts point to potential risks of increasing competition in the realm of global competition, a change in macroeconomic conditions, and businesses that review the way they spend with AI budgets at the prospect of recession. However, the outlook by analysts remains optimistic. Barclays and Loop Capital's projections place price target estimates at $200-$250 per share; this could push the company's market value toward the mid-billions, moving it from $4 trillion to possibly $5-6 trillion.

CEO Jensen Huang's vision

Jensen Huang has been at the front of the company as the driving force of its transition from gaming GPUs to AI infrastructure and is now seen as a leader in the AI Era. Under his leadership, the company has solidified its position while spearheading its vision to create partnerships across Europe and the Gulf, in sovereign AI expanding voice, and even in China, depending on new regulations.

What now

Nvidia's valuation at $4 trillion public company is a first in and of itself and speaks to the defining and transformational reshaping of the tech ecosystem.