Nvidia Becomes Most Valuable Company Amid AI Boom

KATHMANDU: With a market cap hovering around $750 billion, Nvidia announced its first fiscal quarter 2024 results, revealing a 19 percent revenue increase and a 26 percent rise in net income. While these figures were positive, they were not extraordinary. However, the company’s second-quarter outlook, predicting a 65 percent revenue jump, and the bold words of CEO Jensen Huang, ignited a remarkable stock market rally.

“The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” Huang stated. “A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.” This statement signaled to investors that Nvidia was leading a trillion-dollar opportunity, sending the company’s share price soaring.

The day after the announcement, Nvidia’s market cap surged by nearly $200 billion. This marked the beginning of an unprecedented rise. By June 2023, Nvidia reached a market capitalization of $1 trillion for the first time. By March 1, 2024, it had closed above $2 trillion, and a little over three months later, it surpassed $3 trillion.

Earlier this week, Nvidia achieved the ultimate milestone, with its market cap, boosted by a recent stock split, surpassing both Microsoft and Apple to become the most valuable company in the world.

Despite the euphoria among investors, questions about whether Nvidia’s current valuation is justified and sustainable are growing louder. While some believe we are merely at the beginning of the AI boom, others remain skeptical about the extent to which AI will live up to the considerable hype generated by tools like ChatGPT over the past two years.