Nvidia shares have skyrocketed this year, up more than 175% since the start of 2023. It's all thanks to the rise of generative AI. Really powerful chips called graphics processing units (GPUs) are needed to power these new AI systems. These are the kinds of GPUs Nvidia makes.
Despite it's rise, Nvidia does have its detractors. ARK Invest's (ARKK) Cathie Wood explained why her firm sold their Nvidia shares back in January, saying the stock was overpriced.
Nvidia's strong performance has sent the its stock not just to new highs, but granted it entry to an exclusive club: the stocks that have a market cap of $1 trillion plus. Nvidia (NVDA) joins such tech giants as Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN) in the club. Apple was the first member, surpassing the $1 trillion mark in August 2018. Former members of the club include Meta (META) and Tesla (TSLA), which now have market caps of $600 billion+.
Key video moments:
00:00:20 $1 Trillion club members
00:00:44 How Nvidia compares to other $1T members
00:01:35 How AI boosted Nvidia shares
AKIKO FUJITA: Nvidia shares extending gains from its most recent earnings report, and the company briefly joining the trillion dollar club. Brad Smith is here with a closer look. Brad, it's all about the excitement over AI.
BRAD SMITH: It certainly is, Akiko and Seana. And as we think about Nvidia and how they've made their way into the ranks of yes, the trillion dollar club. A very coveted community, if you will, gated community probably as well here. All the things to think about right now, some of these key players in the US for the trillion dollar club.
Now, of course, you won't see Meta and you won't see Tesla within that group as of right now. They've fallen out of it. Nvidia is hoping that it can maintain that $1 trillion stature. And this is a company that, as many of our viewers will remember, went public back in January of 1999. Which means it's taken them about 24 years to get into that trillion dollar club.
You think about some of those other players that have made their way into and held onto that status. Well, yeah, you've got Amazon. Amazon sitting at about $1 and 1/4 trillion dollars right now. Amazon, a company that went public back in May of 1997, they hit the trillion dollar club in July of 2021. It took Apple a whopping 38 years to get into that trillion dollar club. A company that went public back in 1980.
And, of course, I'm relaying this back to the point when they did go public. And then lastly here, want to zero in on the company as well that took the shortest amount of time to get into that trillion dollar club, and that was Google. Google only took 16 years to ultimately, or should I say Alphabet, getting into that trillion dollar club.
And so what has the fanfare been about? It's about AI. And, of course, if you think back to the move that took place, not just the last earnings period for NVIDIA where the stock absolutely skyrocketed, and it was really marvelous to watch here. And there you're taking a look at just this intraday activity that we're seeing, where shares are adding on by about 3% here on the day.
But over the past five days, and there you're seeing that move as the company had reported earnings and really talked about the demand in AI. And if you think about the layers of AI, Nvidia is very critical into the totem pole of this. What we heard was actually Mark Zuckerberg elucidating exactly where the AI totem pole would actually take shape.
And I'm going to break this down in three quick letters. It's AMC. At the top, you've got the applications that are going to sit on top of the M, those models, the language learning models. And at the bottom of it, you've got the chips, and the data center. So at that chips business, NVIDIA has been able to run away with so much of the conversation, the partnerships, and the demand that has started to flow into their direction. And it will be a question of whether or not this is a rising tide that lifts all ships for an extended period of time, or if there are certain vessels within the waters that are winners and losers here.
But as of right now, the big winner on the day that investors are certainly focusing in on is Nvidia, and they've got a lot to continue to track, especially as Jensen Huang has wrapped up much of his speaking over at the Computex forum where he made some major announcements in the form of gaming, in the form of the chipsets, and what we expect to hear from NVIDIA on the demand front going on from here, Akiko and Seana.