Nvidia becomes first company to clinch US$4 trillion in market value

A sign for a Nvidia building is shown in Santa Clara, Calif., May 31, 2023. (Jeff Chiu / AP Photo, File)

Nvidia notched a market capitalization of US$4 trillion on Wednesday, making it the first public company in the world to reach the milestone and solidifying its position as one of Wall Street’s most-favored stocks.

Shares of the leading chip designer rose as much as 2.5 per cent to an all-time high of US$164, benefiting from the ongoing surge in demand for artificial intelligence technologies.

The stock’s recent rally comes despite a sluggish start to the year, when the emergence of a Chinese discount artificial intelligence model developed by DeepSeek shook confidence in stocks linked to the sector.

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Nvidia achieved a US$1 trillion market value for the first time in June 2023 and tripled it in about a year, faster than Apple and Microsoft, the only other U.S. firms with a market value of more than US$3 trillion.

Microsoft is the second biggest U.S. company, with a market capitalization of US$3.75 trillion. Its shares were last up 1.3 per cent at US$503.

Nvidia has rebounded about 74 per cent from its April lows, when global markets were jolted from U.S. President Donald Trump’s tariff volley.

Optimism around trade partners reaching deals with the U.S. have lifted stocks of late, with the S&P 500 hitting an all-time high.

Nvidia holds a 7.3 per cent weight on the S&P 500, the biggest on the index. Other tech behemoths, Apple and Microsoft, account for around seven and six per cent, respectively.

The company is worth more than the combined value of the Canadian and Mexican stock markets, according to LSEG data, and exceeds the total value of all publicly listed companies in the U.K.

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Its stock trade at a 12-month forward price-to-earnings ratio of 32, below its three-year average of 37, according to data compiled by LSEG.

Nvidia’s soaring market value highlights Wall Street’s confidence in the rapid growth of artificial intelligence, with the company’s chips forming the backbone of this technological advance.

It reported a total revenue of US$44.1 billion in the first quarter, marking a 69 per cent jump from a year ago along with a profit of 81 cents a share.

For the second quarter, Nvidia expects revenue of US$45 billion, plus or minus two per cent. It will report second-quarter results on August 27.

Including the session’s gains, Nvidia is up more than 22 per cent this year compared to a nearly 15 per cent rise in the Philadelphia SE Semiconductor Index.

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Reporting by Shashwat Chauhan in Bengaluru; Editing by Chuck Mikolajczak and Arun Koyyur