Nvidia Corporation, the world’s most valuable semiconductor company, has achieved a historic milestone by becoming the first computer chip firm to reach a $3 trillion market capitalization. According to a Bloomberg report, this remarkable feat underscores the immense demand for Nvidia's chips, which are essential for artificial intelligence (AI) tasks.
► Record-breaking surge in Market Value
The Santa Clara, California-based company's shares have skyrocketed approximately 147 percent this year, adding about $1.8 trillion to its market cap. This surge is largely driven by the increasing necessity for AI technology. On June 5 (US local time), Nvidia’s shares climbed by 5.2 percent, closing at a record $1,224.40. This remarkable increase pushed the chip maker's market value beyond $3 trillion, surpassing Apple Inc. in the process.
The last time Nvidia's value exceeded Apple's was in 2002, five years before the first iPhone's release. At that time, both companies were valued at less than $10 billion each, highlighting the extraordinary growth Nvidia has experienced over the past two decades.
► Future Plans and Generative AI
Nvidia is not resting on its laurels. Chief Executive Officer Jensen Huang has announced ambitious plans to upgrade the company's AI accelerators annually. This forward-thinking approach aligns with Huang's vision of generative AI as a new industrial revolution. He expects Nvidia to play a significant role as technology transitions towards personal computers and other AI-driven applications.
During a keynote address at National Taiwan University, Huang emphasized Nvidia's pivotal role in this technological transformation. The recent surge in Nvidia's stock not only underscores the company’s market dominance but also significantly increased Huang’s wealth by over $5 billion, bringing his total to $107.4 billion, according to the Bloomberg Billionaires Index.
Senior equity analyst at CFRA Research, Angelo Zino, expressed optimism about Nvidia's future, noting improved visibility and greater momentum in GPU, CPU, and networking as drivers for continued growth. He believes this development is just the beginning, with Nvidia positioned to capitalize on the growing AI market.
► Impact on the Tech Industry
Nvidia's rise has had a profound impact on the tech industry. The company has benefited immensely from a surge in AI spending, positioning itself in a race to become the world’s most valuable company. Although Nvidia still trails Microsoft Corp. by market value, Wall Street analysts believe it is only a matter of time before Nvidia overtakes it.
Conversely, Apple has faced several challenges this year. Concerns over declining iPhone demand in China and a significant fine from the European Union have pressured its shares. Despite these setbacks, Apple shares have recently turned positive for 2024 as investor sentiment begins to improve.
► AMD Launches New AI Chips to Compete with Nvidia
Amidst Nvidia’s dominance, Advanced Micro Devices (AMD) is making significant strides to challenge the industry leader. Recently, AMD unveiled its latest artificial intelligence processors and outlined its plan to develop AI chips over the next two years. At the Computex technology trade show in Taipei, AMD CEO Lisa Su introduced the MI325X accelerator, set to be available in the fourth quarter of 2024.
Santa Clara, California-based AMD has been vying to compete against Nvidia, which currently holds about 80% of the AI semiconductor market share. To bolster its position, AMD also announced an upcoming series of chips titled MI350, expected to be available in 2025 and based on a new chip architecture. Additionally, AMD revealed the MI400 series, which will arrive in 2026 and be based on an architecture called "Next".
AMD's shares have more than doubled since the start of 2023. However, this surge still pales in comparison to Nvidia’s meteoric rise, with its shares increasing more than seven-fold in the same period.
Nvidia’s unprecedented growth and its surpassing of Apple as the second most valuable company mark a significant milestone in the tech industry. The company’s relentless focus on AI technology and its strategic plans for future advancements position it well for continued success. Meanwhile, competitors like AMD are gearing up to challenge Nvidia's dominance, setting the stage for an exciting era of innovation and competition in the semiconductor market. As Nvidia continues to push the boundaries of AI and computing, the tech world watches closely, anticipating further breakthroughs and market shifts.
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