On May 24, 2023, when Nvidia's market cap was about $750 billion at the time, the chipmaker reported its first-quarter 2024 results. Revenue was up 19% and net income was up 26%, and everything looked good, but it wasn't particularly good. The company's second-quarter outlook predicted a 65% increase in revenue, and comments from CEO Jensen Huang sparked one of the most notable stock price rallies in recent years.
“The computer industry is experiencing two simultaneous transitions: accelerated computing and generative AI,” Huang said at the time. “As companies race to apply generative AI to every product, service, and business process, $1 trillion of deployed global data center infrastructure will move from general-purpose computing to accelerated computing.” What investors heard was that Nvidia was on the front lines of a trillion-dollar opportunity, and the company's stock price instantly soared to unprecedented highs. The next day, Nvidia's market cap increased by nearly $200 billion, but it was just the beginning.
The company will reach $1 trillion in market cap for the first time in June 2023, surpass $2 trillion on March 1, 2024, and top $3 trillion just over three months later. Earlier this week, Nvidia passed its final milestone, making the chipmaker the world's most valuable company with a market cap boosted by recent stock splits that surpassed Microsoft and Apple. While investors have certainly enjoyed the journey to get here, questions are naturally growing about whether Nvidia's current valuation is justified and sustainable. While some argue that the AI boom is just beginning, others are still not convinced that AI will deliver on the hype that tools like ChatGPT have created over the past two years.
