Nvidia now world’s biggest public company after passing Microsoft
The inevitable has happened – the chip designer is worth more than any other company traded on any stock exchange. It’s also bigger than the entire London stock market. Graeme Evans explains how it happened.
19th June 2024 13:13
by Graeme Evans from interactive investor
A valuation bigger than the entire London market today put NVIDIA Corp (NASDAQ:NVDA) on top of the world as it continues a run that’s also powered a series of S&P 500 index records.
Nvidia’s $3.335 trillion (£2.620 trillion) tag ousted Microsoft Corp (NASDAQ:MSFT) (£3.317 trillion) as the biggest public company after last night’s 3.5% share price rise took this year’s advance to 180% or $2.1 trillion (£1.6 trillion).
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As recently as October 2022, Nvidia was the 18th largest in the S&P 500 worth less than $300 billion. The surge, which has been fuelled by Nvidia’s 80% share of the rapidly-expanding market for AI chips, has accounted for 35% of this year’s gains by the S&P 500.
The leading benchmark closed last night at a fresh record of 5487, having comfortably outperformed the expectations of US investors through a jump of 16% this year.
Deutsche Bank strategist Jim Reid said this morning: “I don’t think there has been an example anywhere in history of the largest company in the world growing so quickly.”
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The latest surge for the Nvidia valuation follows this month’s 10-for-1 stock split, which has made the company more affordable to many retail investors at last night’s price of $135.
Nvidia’s remarkable success follows soaring demand for graphics processing units (GPUs), ensuring that its quarterly results have comfortably exceeded the high bar set by analysts and its own management team led by Jensen Huang (pictured).
Past performance is no guide to future performance. Chart made with Flourish
Guidance issued in May predicts that Nvidia will deliver another $2 billion sequential increase in current quarter revenues to $28 billion. This compares with the $10 billion the company forecast just over a year ago in "shock and awe" results that triggered the valuation surge.
Recent upside for the stock has also been fuelled by the potential of its new and more powerful Blackwell platform, which is expected to unlock generative AI for more organisations.
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The new architecture features six technologies for accelerated computing in data processing, engineering simulation, electronic design automation, computer-aided drug design, quantum computing and generative AI — all emerging industry opportunities for Nvidia.
Google (Alphabet Inc Class A (NASDAQ:GOOGL)), Meta Platforms Inc Class A (NASDAQ:META), Microsoft, OpenAI, Oracle Corp (NYSE:ORCL) and Tesla Inc (NASDAQ:TSLA) are among those expected to adopt Blackwell.
Without taking single-name views, UBS Global Wealth Management said today that Nvidia’s strong performance underlined its belief that the investment case for AI remains intact.
It added: “The recent reporting season revealed better-than-expected AI monetisation and capital spending trends, which should reinforce AI chip demand.
“We anticipate the semiconductor-led AI rally will broaden in the second half of this year and beyond, and we continue to like big tech and key AI segments such as GPUs, custom chips and foundries, and semi-cap equipment.”
One of the other beneficiaries of the AI boom has been Cambridge-based chip designer ARM Holdings ADR (NASDAQ:ARM), which closed last night’s session 8% higher at a fresh record share price of $174. Nasdaq–listed Arm is up 150% this year, having floated last September at $51 a share.
Recent results revealed strong adoption of Arm’s v9 chip designs in the smartphone, server and automotive markets, as well as increased demand for Arm’s power-efficient technology for AI in data centres and edge computing.
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