Nvidia has done just that, joining the Trillion Dollar Club with tech giants like Amazon, Microsoft and Alphabet (essentially Google) introducing door cards in gold-plated executive restrooms. Oh yeah, he’s Apple, the purveyor of high-priced technology.
Milestone Reached Today (via) Guardian) as the stock continued to climb after the huge second-quarter sales forecast given on the company’s recent first-quarter earnings call. By pointing out that 64% expect second-quarter revenue to reach $11 billion, the fact that it was down 13% year-over-year was completely sidelined. Up YoY.
But while the stock rallied in response to the announcement, it wasn’t until today, after a 6% rise in market capitalization, that it broke the $1 trillion mark. In fact, it is still on the rise as of this writing, with its market cap currently at $1.02 trillion.
It’s all based on the fact that it powers the technology industry’s current darling: generative AI. Nvidia’s data center GPUs are parallel computing monsters that run ChatGPT and more, giving them a new seat at the big tech top table.
It may be worth noting that market analysts have been warning for some time that Nvidia is overvalued, but it goes back to the vibrant days of late 2021 when the stock hit a new all-time high. They may reconsider it now that the company has exceeded the price it reached. In the shade under $330.
The fact that AI is not going away and is currently trading at $412 is still pretty remarkable. But there are also rumors that the AI tech bubble could one day burst, sending stocks crashing. And the fact that NVIDIA made less than a tenth of Alphabet’s revenue last year might suggest that Nvidia may be a little overvalued.
As an aside, NVIDIA’s third-largest shareholder and board member, Tench Coxe, has sold 100,000 shares since the company’s biggest stock gain last week. He’s cashed in about $38 million, but considering he’s said to have about $4.3 million. a million I own a stake in the company this time last year, but I have no intention of cashing in before things get worse.
Tench Coxe, $NVDA’s third largest shareholder and board member since 1993, sold his stake today 👇 pic.twitter.com/HiVwQYWqTGMay 30, 2023
I wonder if it’s a little bit of pocket money.
The real caveat in this Trillion Dollar Club story is meta. The Facebook owner joined the club in 2021, but has since been stripped of membership and is listed with a market capitalization of 20 million yen. just $682 billion now. That said, there’s no guarantee that NVIDIA will stay there, especially since all of its rapid growth, especially in recent times, has been based on supporting business areas that are still in their formative stages, and things can change quickly.
If someone suddenly finds a better way to boost AI in place of a ridiculously powerful graphics chip (e.g. Intel’s distributed local processing could take hold), it’s in the green team’s bottom line. It can have a big impact.
Basically what I’m saying is don’t forget us PC gamers in this AI story, Jen-Hsun. Because no matter what happens in the burgeoning AI space, you will always need better GPUs.
