Nvidia Breaks Record, Becomes First $5tn Company

Nvidia has just created financial history. The US chipmaker has blasted through a $5 trillion market valuation to cap a remarkable rise that no firm in history has ever managed.

This astonishing ride makes it the undisputed champion of the artificial intelligence boom. Its ascent has been remarkably swift; it first touched a $1tn valuation only in June 2023. Now, its value even surpasses the entire economic output of most nations.

The shares of the company jumped more than 5.6% recently, driven by investor optimism. This optimism is a result of Nvidia’s important deals in China and also with leading AI firms such as OpenAI and Oracle. Its high-performance chips are considered the engine of the global AI revolution, fueling demand that has so far proved insatiable. Nvidia now stands taller than whole sectors within the S&P 500 index.

A Bubble Set to Burst?

But this stratospheric rise is not without its skeptics, and concerns are growing that the AI sector is an overinflated bubble. Warnings have come from major financial institutions such as the Bank of England and the International Monetary Fund.

Danni Hewson, head of financial analysis at AJ Bell, captured the sheer scale, noting the valuation is “a sum so vast the human brain can’t properly get a handle on.” She added, “Of course, this is going to do nothing to dispel fears over an AI bubble, but the market seems keen to march on regardless.”

Some critics point to “financial engineering,” where big AI firms invest heavy sums in one another. This complex web of financial relationships is drawing scrutiny. For example, Nvidia itself made a massive $100bn investment into OpenAI last month. Meanwhile, JP Morgan boss Jamie Dimon, per BBC said that “the level of uncertainty should be higher in most people’s minds,” signaling caution on Wall Street.

Navigating Global Politics Nvidia’s story is also one of navigating tricky geopolitical waters: China remains the biggest market for its products, even as the US government imposed restrictions.

An unprecedented deal now requires Nvidia to pay 15% of its Chinese revenues to the US government. Furthermore, comments from former President Donald Trump about discussing Nvidia’s AI processors with China’s leader gave the company’s stock a recent nudge upwards.

Under the guidance of charismatic CEO Jensen Huang, Nvidia shows no signs of slowing down. Huang recently announced a flurry of new partnerships, confidently predicting $500 billion in AI chip orders through next year.