Nothing stops Nvidia anymore. Last Friday, Jeffrey Huang’s company reached for the first time $2 trillion in market capitalization. And now, just three weeks after overtaking Amazon and Google parent Alphabet, it has likely taken the place of Saudi oil group Aramco to become the third most valuable company in the world.
These figures confirm the insolent financial health of the green giant, whose results have only exploded for months. At the start of 2023, the company was valued at less than 500 billion. Less than six months later, the symbolic bar of 1000 billion fell. And since the start of 2024, this dynamic has accelerated further. Between January 1 and today, its value increased from 1,200 to more than 2,000 billion dollars — an increase of 66% in the space of two months!
If Nvidia is so pampered by Wall Street, it is because it benefits from a privileged place in the most fashionable industry of the moment, namely artificial intelligence. It has a virtual monopoly on hardware specialized in AI, and supplies more than 80% of the chips used by other tech giants (Microsoft, OpenAI, Meta, etc.) to train their models.
Apple in the crosshairs?
In addition, Nvidia’s excellent health seems set to last. Certainly, other hardware giants are now in the running; AMD already offers a GPU specially designed for AI, Intel should follow very soon, and newcomers like Groq also hope to find a place in the sun (see our article). But it is clear that the GPU titan still has several years ahead of the competition.
His H100 GPU remains as essential as ever on the market, with overflowing order books and even more powerful equipment in the pipeline. This year, the company should release its new H200 GPUs, already announced as the new benchmark in AI hardware. In 2025, it is another even more efficient model called X100 which is expected. Some financial analysts therefore estimate that Apple, now firmly established in second position with around 2700 billion capitalization, could be caught up within one or two years.
There would then be only one company left capable of competing on the stock market: Microsoft, the only company valued at more than $3 trillion today. Could Nvidia also overtake the software titan? This promises to be much more difficult. Indeed, Satya Nadella’s company is also on the front line in artificial intelligence, as evidenced by its investment of 13 billion in OpenAI – the firm behind the essential ChatGPT. But given the profits made by Nvidia at the moment, nothing seems impossible anymore.
Bubble or no bubble?
Other analysts, however, are a little less enthusiastic. Some believe that Nvidia’s model contains a big vulnerability that could harm its crazy march forward. In fact, the firm does not control its entire supply chain. In particular, it subcontracts the production of its semiconductors to third parties such as the Taiwanese giant TSMC. At this level, the strategy is radically opposed to that of Intel; CEO Pat Gelsinger has placed these materials at the heart of his new strategy (see our article). However, it is a region which is the subject of major geopolitical tensions. And if the situation deteriorates, Nvidia could have difficulty obtaining supplies. Others, on the other hand, believe that this model is a strength, and that it offers very comfortable logistical flexibility to the GPU giant.
The other point that is debated among analysts, and which could potentially impact Nvidia, is the financial health of the AI sector. Some consider that the current hype around AI leads to a huge overvaluation of all these products, and that we are therefore in the heart of a huge economic bubble which threatens to burst within a few years. And if so, Nvidia would certainly not emerge unscathed. Because if demand is certainly not going to weaken, such a scenario would undoubtedly force the company to considerably reduce its margins. See you in a few years for a new inventory.
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