The Race to $4tn

Nvidia rose to a fresh all-time intraday high at $160.98 as the chipmaker’s market cap rose above $3.92tn. Can it continue to break out and become the world’s first $4tn company? The race is on.

It took 24 years for Nvidia to reach a valuation of $1 trillion, but just nine months to double in size and little over 3 more to take it to $3 trillion last year. It's been a more up-and-down journey since then to get north of $3.9tn - we’ve had DeepSeek, sweeping and unsettling restrictions on chip exports, and of course the topsy-turvy journey of Trump’s tariffs.

Microsoft is the second most valuable company with a market cap of $3.71tn, while Apple sits third at $3.19tn. 

Nvidia’s high yesterday implied a market cap of $3.92tn, above Apple’s record closing value of $3.915tn on December 26, 2024. The stock closed at $159.34, implying a market cap of $3.89tn with it trading at about 36x forward earnings.

The latest move comes as the company's next-generation AI chip, the Blackwell Ultra AI GPU, became commercially available. CoreWeave and Dell Technologies announced on Thursday the first cloud provider deployment of Nvidia's latest GB300 NVL72 AI systems for customers.

NVDA Retakes AI Leadership

There were questions about Nvidia’s ability to continue its meteoric rise for months, but earlier this year investor assumptions about the AI boom were cast in doubt by China’s DeepSeek, which claimed to produce generative AI language models for a fraction of the cost of US peers, such as OpenAI or Gemini. It felt for a short while that the huge investment in AI chips by hyperscalers such as Meta and Alphabet was perhaps unnecessary. Investors had a crisis of confidence - the announcement around DeepSeek sent shares in Nvidia plunging, but the recovery was swift enough. The data from the Chinese firm was suspect and it quickly became obvious that DeepSeek had limited implications for investment in AI outside of China. 

Trump’s Liberation Day tariffs sent Nvidia shares plunging again along with the rest of the stock market. But investors bought this dip and it’s rallied significantly since then to hit these fresh all-time highs. The mood music on tariffs and chip controls seems more favourable now than earlier this year at the depths. 

A race among the likes of Microsoft, Meta, Microsoft and Alphabet to build AI data centres continues to fuel insatiable demand for Nvidia’s chips. There have been doubts about whether this pace of investment can continue – but again it seems like for now investors are looking at the AI boom continuing for the foreseeable future.

There are always risks to the bull case – tariffs could be problem again, chip export controls could tighten further, hyperscalers might be forced to scale back their assumptions. And competition is increasing – the question is whether Nvidia continues to stay ahead of the pack to justify its valuation and earnings potential. For instance, OpenAI has started using Google’s AI chips to power ChatGPT, marking a shift away from exclusively using NVDA tech. OpenAI will use Google’s tensor processing units (TPUs), albeit the most sophisticated versions of these are set to be reserved for Google’s internal use.

What the Analysts Say

Loop analyst Ananda Baruah – who has a Buy rating on the stock – said that he expects AI spending to increase tonearly $2tn by 2028 and that Nvidia will be a major beneficiary. “Our work suggests we are entering the next ‘Golden Wave’ of Gen AI adoption and Nvidia is at the front-end of another material leg of stronger-than-anticipated demand,” he wrote. “We remind folks that Nvidia remains essentially a monopoly for critical tech, and that it has pricing (and margin) power.”

Mizuho this week raised its price target on Nvidia to $185 from $170 previously, predicting strong demand for its Blackwell chips in the second half of the year.