The current market leader of AI chips, Nvidia, produced records and reached 3.4 trillion market capitalization by the close on October 14, 2024. Its stock went up by 2.4% to $138.07 as the demand for its leading-edge AI chips grew, and enthusiasm for artificial intelligence technology rose. Nvidia’s exceptional increase now puts it in striking distance from Apple’s $3.5 trillion market capitalization, fuelling theories that the semiconductor company could shortly become the most valuable globally.
This stock price rise has been triggered by the proven domination of this firm in the AI hardware market especially through its GPUs. It underlies a variety of AI-related models or services including ChatGPT and the super AI models that big companies like Microsoft, Google, Meta, and Amazon use. Nvidia has been identified to have a strategic position in the AI industry; therefore the company sits on this growing market.
Record Performance Amid AI Investment Boom
Nvidia has been on a meteoric rise and the last quarter set a record high. The performance has seen the stock rise by almost 180% this year and over 950% higher than in early 2023. Nvidia dominates and addresses 95% of AI training and inference chips which are important for machine learning and other AI applications. This positions the company to capture a leading unveiling of the investments made by the leading technology firms in AI infrastructure.
Tech giants are racing to build AI capabilities, and Nvidia’s chips have become the backbone of their AI operations. “Billions of dollars from tech companies’ AI budgets are being funneled into Nvidia’s coffers,” according to market analysts. The anticipation of even higher future demand is being driven by Nvidia’s upcoming Blackwell chips, which are expected to generate massive revenue during the fourth quarter of this year. CEO Jensen Huang recently confirmed the immense demand for these new AI chips, stating that interest in Blackwell has been “insane.”
Tech Giants Fuel Nvidia’s Surge
While Nvidia is set to reap big from the AI investment wave, other established technology firms like Microsoft Google, and Facebook’s Meta among others are expected to drive its growth even higher. These companies will be announcing their results for the financial quarter within the next few weeks and the market is waiting to see how much of their budget is being allocated for Artificial Intelligence infrastructure. Most of this spending will go straight to Nvidia since it continues to be the market provider of AI chips.
Mizuho Securities estimates that Nvidia will post an 82% increase in revenue, reaching $32.9 billion for the quarter ending in October. The company has also reported that its revenue more than doubled in the last five quarters, tripling during at least three of those periods.
The race to develop AI capabilities has seen global spending on AI infrastructure skyrocket, with Nvidia’s GPUs serving as the foundation for these efforts. Moreover, in addition to the domestic market, Nvidia is gradually penetrating into the global market: recently, it signed contracts with such companies as Foxconn to create supercomputers. NVIDIA ‘s partnership for manufacturing with Foxconn will help strengthen its position in the AI hardware market and offer other revenue sources if the demand for AI increases outside of America and Asia.
Challenges on the Horizon
In any case, the company has some issues which, for some reason, did not affect its fast growth, such as Nvidia. Government regulation poses another risk which may be from the US Department of Justice in the future. Secondly, uncertain global economic conditions such as the continuous confrontation between the US and China on the trade fronde impact Nvidia’s supply chain and its sales market. However, there are some risks in China that still exist in Nvidia, as Nvidia’s strategic plans to move away from China like joining with Foxconn to produce the servers in Mexico, etc.
The stock prices have fluctuated at some points in time, and Nvidia’s stock even fell for a while after the release of second-quarter earnings, but investors remain optimistic. The site also predicts that Nvidia will continue to benefit from the AI craze since the market for such technology is rapidly expanding worldwide.
The Path to the Top
Nvidia’s rise to a $3.4 trillion market cap marks a turning point in the tech industry.
It started as a gaming GPU company and now positioned itself as a leader in the AI world. Since AI is expected to revolutionize industries across the global landscape, Nvidia is positioned well, as a first mover with a commanding lead. Now, with Nvidia closing in on Apple to become the world’s most valuable chipmaker, investors are waiting for the chipmaker’s next quarterly report and its AI expansion.
