In a rare feat that threatens to reshape the technology landscape, Nvidia, the trailblazer in AI chips, overtook Amazon’s market value and is now within striking distance of overtaking Google’s parent company, Alphabet. Nvidia’s stock has quadrupled in the past 15 months as investors buy into its dominance in space, revolutionizing industries and driving business transformations.
The rise of Nvidia is remarkable given that it was only the seventh-largest company a year ago, the 12th largest three years ago, and not even in the top 20 four years ago. However, its meteoric trajectory has been fueled by an unprecedented wave of demand for its advanced graphics processing units, which are used in data centers to perform the complicated computing tasks needed to power AI-related functionality.
That demand has been reflected in Nvidia’s strong financial performance. The company has seen a profit growth of almost 50% this year and is positioned to continue expanding its footprint as more companies integrate AI. Investors appear to be confident that Nvidia’s prospects remain bright, with Morgan Stanley predicting the stock could climb to $800 a share in the next decade.
Nvidia’s surge comes as the “Magnificent Seven” — comprising Tesla, Amazon, Apple, Microsoft, Alphabet, and Facebook — race to incorporate AI into their products and services. The company’s brisk growth reflects the growing importance of the field, which has the potential to reshape sectors like healthcare, banking, transportation, and agriculture.
But Nvidia’s rise has not been without its setbacks. Last week, Amazon’s head of cloud computing said that AI-based companies are overhyped and compared the current climate to the tech bubble and bust at the turn of the century. And while the company’s bottom line has been boosted by its myriad AI investments across sectors, the steep rise in the market cap has raised concerns that it could be overvalued and subject to a correction.
Despite these hurdles, Nvidia is now poised to overtake Alphabet as Wall Street’s third most valuable company. The tech giant’s shares slipped on Tuesday, but it still ended the day with a market capitalization above Amazon’s of $1.75 trillion.
Nvidia has not been worth more than Amazon since April 2002, but its stock price has soared 24,000% in the past two decades. As the demand for AI chips grows, the company’s stock is expected to continue climbing. It may soon overtake Alphabet as the most valued company in the United States. Apple is ahead of the pack as the most valuable company in the world, followed by Saudi Aramco and Microsoft.
