Athira Sethu
Kochi, 6 November 2024
Nvidia became the world’s biggest company in terms of market cap when it surpassed Apple on Tuesday with a market cap worth $3.43 trillion. Apple had a market cap of $3.38 trillion.
This shows the growing importance that artificial intelligence has on the streets of Wall Street. While Nvidia shares went up 2.9%, the prices rose to $139.93. The stock has now been over 850% higher since the end of 2022.
The main reason behind Nvidia’s rise has been the demand for AI technology, which has become a significant driver of its success.
The chipmaker now accounts for 7% of the S&P 500 Index and has contributed around a quarter of the index’s 21% gain this year. This time, however, it held the top spot for a longer period than when Nvidia in June briefly became the most valuable company of US.
More and more of the world’s leading companies are investing in AI: Apple has come out with AI-enabled iPhones, and Microsoft, Amazon, Alphabet, and Meta are all rolling out new AI features in cloud services, AI development tools, and advertising. All except Apple are large customers of Nvidia, the chip makers that power much of the AI infrastructure for these companies-all of which have been vocal about their commitment to investing in AI for future growth.
This is an indication of the strength of demand for AI technology as the company’s stock has gone up 183% this year. Nvidia is among the best-performing stocks in the S&P 500 after Vistra Corp. and Palantir Technologies. Success also comes at a time when the company has cleared issues over its Blackwell chip, which had experienced delays due to engineering problems.
Analysts expect revenue for the current fiscal year to be more than double what it was and 44% in the following fiscal year. Wall Street analysts continue raising their profit and earnings estimates for the company, seeing the demand for AI continue to grow.
This growing demand for AI not only is a boon for Nvidia but also attracts very heavy investments by other companies as well. Companies such as Taiwan Semiconductor Manufacturing Co report a good sale and, recently, OpenAI successfully raised funds that valued it at $157 billion. That again is another example of how AI is rebranding the tech world, with the most advanced AI models at its disposal.
The company most likely to benefit from this growth will be Nvidia, as these major tech companies are making all-out efforts to heavily invest in AI and rely on Nvidia’s chips to drive their technology. The outlook for Nvidia looks bright as it continues to enjoy strong growth prospects ahead.
