NVDA: Now the Top of the Heap

MSFT and AAPL rose 81% and 65%, respectively, while NVDA returned 754% over the last two years.

Today, with no international crises or natural disasters as competition, the headlines again return to Nvidia, which surpassed Microsoft as the most valuable company in the world. [bold added]

Nvidia, a 31-year-old company, became the world’s most valuable firm on Tuesday. The stock closed at $135.58, giving the chip maker a valuation of $3.335 trillion, just above Microsoft at $3.317 trillion. [Blogger's note: Apple closed in third place at $3.286 trillion.]

It marks the first time a company other than Microsoft or Apple has held the title of largest company since February 2019 when Amazon.com briefly topped the list. Nvidia was ranked fifth largest by market valuation a year ago and was ranked 10th largest two years ago. Five years ago, it wasn’t in the top 20 largest companies.

How could so many on Wall Street have been so wrong about Nvidia? One easy explanation: investors had become jaded because the realization of artificial intelligence was always sometime in the future. That is, until the release of ChatGPT in November, 2022, showed everyone how millions could become instantaneously more productive in research and writing reports. Just imagine the possibilties in hundreds of other endeavors. Note from the graph that Nvidia's stock price growth separated itself from Microsoft, Apple, and other tech companies in November, 2022.

Nvidia's limits will eventually be reached when the companies that can buy its chips for multi-million-dollar data centers find that they can't realize a return on their investment. But that moment is years away, especially with everyone jockeying for leadership positions in markets that no one fully understands.