Nvidia, the leading chipmaker, approached a significant milestone as its market capitalization briefly reached $1 trillion on Tuesday before retracing to $990 billion. To maintain its distinction, Nvidia shares needed to remain above $404.86 throughout the day. Despite a slight pullback in the afternoon, the stock held onto a fresh 52-week high, ending just below the $1 trillion valuation. Last week, Nvidia’s stock soared after surpassing consensus estimates with strong quarterly earnings.

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The chipmaker’s remarkable growth also influenced other players in the industry, except for Intel, and was fueled, in part, by more positive estimates than anticipated. Nvidia’s projections for the second quarter of fiscal 2024 alone stood at $11 billion in sales, a significant 50% higher than consensus estimates of $7.15 billion.

The past year has been exceptional for chipmakers, the tech sector, and the Nasdaq, driven by the AI revolution and the possibility of a slowdown in Federal Reserve rate hikes. Alongside Nvidia, other tech giants such as Alphabet, Meta, and Microsoft experienced an upswing in last week’s trading.

Nvidia’s graphics processing units (GPUs) play a critical role in powering generative AI platforms like OpenAI’s ChatGPT and Google’s Bard. While historically known as leaders in discrete or stand-alone GPUs, Nvidia has shattered the perception that GPUs are primarily for gaming. The emergence of crypto mining and AI applications has reshaped this belief, leading to substantial stock price increases for GPU manufacturers and suppliers like Nvidia, Advanced Micro Devices, and Taiwan Semiconductor Manufacturing.

In contrast, Intel, facing challenges in inventory management and development, has traditionally focused on the central processing unit (CPU) chip market. As a result, Intel has not experienced a comparable surge in investor interest. With its Tuesday morning market cap, Nvidia joins the exclusive club of trillion-dollar companies that includes Apple, Alphabet, Amazon, and Microsoft. Prior to Tuesday’s opening, Nvidia shares had already surged 166.5% year-to-date, further solidifying its strong performance.


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