TMTPOST -- Nvidia Corporation on Wednesday achieved a milestone, becoming the the first public-traded company with the market capitalization hitting $4 trillion.
Screenshot from Nvidia
Nvidia stock soared as much as 2.8%, driving its market value briefly topping $4 trillion, though it pared some gains later and closed 1.8% higher with the market cap settling at $3.97 trillion. The stock refreshed its close record for the second day, extending its surge this year to more than 20%. The Santa Clara, California, company is currently 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 Britain.
Despite closing below the $4 trillion market value, Nvidia stock has skyrocketed since OpenAI』s ChatGPT initiated new artificial intelligence (AI) frenzy in 2020, with a gain of more than 1,000% since the start of 2023. The California-based company first passed the $1 trillion mark of market valuation in June 2023, and less than a year later, first surpassed $2 trillion. Last month saw its market cap for the first time topped $3 trillion, reclaiming the top spot that the leading chipmaker ceded to Microsoft Corporation.
The new record of Nvidia stock marks investors regained confidence of the AI chip giant after Chinese upstart DeepSeek shocked Silicon Valley with a competitive model DeepSeek-R1 comparable to OpenAI』s at a fraction of the cost of the U.S. rival, which also raised more questions on sustainability of the massive AI spending on infrastructure. And the financial results and outlook provided for the first quarter of this year reassured investors regarding the AI demand amid increasing economic uncertainties brought by the Trump administration.
Nvidia』s big customers including Microsoft, Meta Platforms, Inc., Alphabet Inc. and Amazon.com. Inc., which contribute around 40% of the company』s revenue, projected around $350 billion of capital expenditures (Capex) over their coming fiscal years, compared with the spending of $310 billion for the current year, according to the average of analyst estimates compiled by Bloomberg. Global spending on AI infrastructure is expected to surpass $200 billion by 2028, according to market research firm International Data Corporation (IDC).
Nvidia』s stock rally was also strengthened by the earnings report late May, which smoothed concerns over the supply chain hurdles and shock from the trade war as the Trump administration is tightening export control on AI chips to China.
Nvidia on May 28 posted revenue of $44.1 billion for its first fiscal quarter, beating analysts expected $43.29 billion. That represented a year-over-year (YoY) increase of 69% in sales, slowing down with a 78% surge three months earlier. On non-GAAP basis, adjusted earnings per share (EPS) shot up 33% YoY to $0.81 after a 71% YoY increase for the preceding quarter, while EPS excluding charge related to H20 chips and tax impact stood at $0.96, still better than estimated $0.93. Adjusted gross margin including H20 charge dropped to 61%, down from 78.9% a year ago. Without H20 charge, the margin was 71.3%, compared with estimates of 71%.
Nvidia said in a statement it incurred a $4.5 billion charge during the April quarter associated with H20 excess inventory and purchase obligations as the demand for H20 diminished under the new requirements for export license. The AI chip giant on April 9 was informed by the U.S. government that a license is required for exports of its H20 products, which were designed primarily for China, into the market.
Nvidia expected revenue to be $4.5 billion, plus or minus 2% for the current quarter. The outlook is roughly in line with Wall Street forecast as the mid-point is slightly below the consensus expectation of $45.5 billion. The company said its sales guidance reflected a loss in H20 revenue of around $8 billion. Adjusted gross margin is projected to be 71.5% to 72.5%, in line with estimated 71.7%.
Wedbush Securties analyst Dan Ives in his note on June 27 called Nvidia 「the foundation for the AI Revolution.」 The analyst commented on Wednesday: 「This is a historical moment for Nvidia, the tech space flexing its muscles, and speaks to the AI Revolution hitting its next stage of growth led by the one chip fueling AI … Nvidia.」 He expected Microsoft, which currently has a valuation around $3.77 trillion, will also cross the $4 trillion threshold this summer.
