How Nvidia took over the world – and where it goes from here

Nvidia CEO Jensen Huang delivers a keynote address during the Nvidia GTC Artificial Intelligence Conference on 18 March, 2024 in San Jose, California (Getty Images)
Nvidia CEO Jensen Huang delivers a keynote address during the Nvidia GTC Artificial Intelligence Conference on 18 March, 2024 in San Jose, California (Getty Images)

Since 1 January, 2024, the value of Nvidia has risen by an average of more than $10 billion every single day. To put this figure into perspective, that’s more than the current market cap of Reddit – and more than Nvidia was worth just a decade ago.

On Tuesday, the California-based company became not only the world’s most valuable company, but also the most valuable company ever. A new record share price of $136 took its overall market capitalisation above $3.3 trillion – more than the annual GDP of the UK.

The astonishing rise of the computer chip maker can be pegged, almost to the day, to the release of ChatGPT in late 2022. The artificial intelligence chatbot brought large language models (LLMs) into the public view for the first time, becoming the world’s fastest growing app as people realised the potential AI held for everything from drafting work emails, to offering travel tips.

Nearly every major tech conference and keynote from that point on has had a heavy focus on AI – Google’s most recent developer event mentioned the term more than 120 times during a 110 minute presentation – while demand for the chips that power AI has soared to never-before-seen levels in the tech industry.

For Nvidia, this artificial intelligence boom coincided with a period of massive market dominance for its graphics processing units (GPUs), which are essential hardware for building and training powerful AI models.

In taking the top spot of the world’s most valuable company, Nvidia surpassed the very same US tech companies that are now pivoting towards AI-centric futures: Microsoft, Apple and Alphabet (Google).

While Nvidia’s rise can be attributed to the critical role that its chips play in the race to dominate the market for AI, some industry figures have warned that its recent lack of competition in the space may soon be coming to an end.

As capital pours into the industry, a number of other startups have also entered the space, while existing tech giants like Apple have moved to make their chips in-house.

“Nvidia’s relentless rise to the top of the leader board illustrates a crucial point: powerful hardware is the foundation upon which the AI revolution is built,” Daniel Bathurst, head of product at AI cloud provider Nscale, told The Independent.

“As enterprise and start-ups alike bet big on AI, more players are entering this arena and catching up quickly. In this battleground for AI spend, constant innovation is king. But, while powerful chips are a key ingredient, the AI ecosystem is more than just hardware. We need a diverse offering at the chip, hardware, and software level to support a thriving, sustainable AI landscape. As AI continues to develop, collaboration and diverse innovation in every element of the infrastructure will be crucial to unlocking its full potential.”

The AI frenzy has helped boost other technology firms, with four of the top five most valuable companies now from the US tech sector.

Nvidia’s dramatic rise has attracted retail investors and drawn comparisons to pandemic-era meme stocks that saw similarly meteoric gains – followed by inevitable collapses. Yet some analysts believe the semiconductor giant could continue its rally, at least in the short term.

Following the company’s recent 10-for-1 stock split, Rosenblatt Securities analyst Hans Mosesmann increased the share price target for Nvidia from $140 to $200. This would take its market value close to $5 trillion.

The forecast is based on Nvidia’s anticipated earnings for 2026, suggesting that even if other rivals are able to take some of the firm’s market share for hardware, its AI software will see Nvidia’s gold rush continue.

“The real narrative lies in the software that complements all the hardware goodness,” Mosesmann noted.

“We anticipate this software aspect will significantly increase in the next decade in terms of overall sales mix.”