Market Cap Hits $3.34 Trillion, Ranks 1st
Surpasses MS and Apple in 31 Years Since Founding
Stock Price Soars 9x from Last Year to Now
Generative AI Boom Sparks... Chip Demand Expansion Continues
Wall Street "Optimistic Outlook Continues," Increases Investment Share
NVIDIA has become the most valuable company in the world. Wall Street continues to raise its stock price outlook for NVIDIA due to the AI chip demand driven by the expansion of the artificial intelligence (AI) boom from big tech companies to various industries and governments.
On the 18th (local time) at the New York Stock Exchange, NVIDIA closed up 3.51%, pushing its market capitalization past $3.34 trillion. Microsoft (MS, $3.32 trillion) and Apple ($3.28 trillion), which had been competing for the top market cap spot since the beginning of the year, were pushed down to the second and third largest companies, respectively. This is the first time since its founding in 1993 that NVIDIA has reached the number one spot in market capitalization.
NVIDIA started as a company manufacturing graphics processing units (GPUs) for running early 3D video games and was only well-known among gamers in the late 1990s. However, since last year, with the global surge in generative AI, the demand for GPUs essential for training and inference of large language models (LLMs) has significantly increased, changing the situation.
This is the main reason why NVIDIA's stock price has surged about ninefold since last year. Although AMD, Intel, and big tech companies have entered the AI chip market, NVIDIA still dominates over 80% of this market. NVIDIA's revenue in the first quarter (fiscal year February to April) was $26.04 billion, a 262% increase compared to the same period last year, and the data center segment revenue, which includes AI chips, soared 427%, demonstrating this dominance.
Since early this year, U.S. economic media have suggested the possibility of an AI bubble and a correction in NVIDIA's stock price, but the stock continues to soar. Above all, the outlook is that demand for advanced GPUs will remain strong as AI becomes more sophisticated. AI is being emphasized as multimodal, covering text, images, voice, and video, and movements toward developing AGI (Artificial General Intelligence) that surpasses human-level capabilities are becoming visible.
Most recently, it is evaluated that AI chip demand is increasing from governments worldwide. As securing information and technological sovereignty becomes important from a security perspective, the need for proactive AI data center construction is growing. A data center is a collection of AI computers assembled with AI accelerators (GPU + HBM, high-bandwidth memory) and central processing units (CPUs), and it is gaining attention as essential for expanding AI services.
The AI wave is just beginning, and accordingly, AI chip demand is expected to continue expanding. Wall Street also expects AI chip demand to increase in industrial sectors such as pharmaceuticals, shipbuilding, and automobiles.
Wall Street continues to raise its price targets for NVIDIA. Hans Mosesmann, an analyst at Rosenblatt Securities, raised NVIDIA's target price from $140 to $200. This is 47% higher than the closing price and the highest target price issued so far on Wall Street. This suggests that the market capitalization could approach $5 trillion. Chris Rolland, an analyst at investment firm Susquehanna, also raised NVIDIA's target price from $145 to $160.
Additionally, news that the world’s largest technology stock investment exchange-traded fund (ETF), the Technology Select Sector SPDR Fund (ticker XLK), will soon significantly increase its weighting of NVIDIA through rebalancing is also seen as positive. XLK is an ETF that currently holds over 20% each in Apple and Microsoft in its portfolio, but NVIDIA's holding is only about 6%, leading to criticism that its rise has not kept pace with the AI rally. XLK plans to reduce Apple's weighting to 20% while increasing NVIDIA's weighting to 21%, making NVIDIA the second-largest holding in the ETF.
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