The gold rush continues. The AI hype makes chip giant Nvidia the world's highest-valued listed company.
The company has an enormously strong position. It's standing at the forefront, selling shovels to get the gold, says Nordnet's savings economist Frida Bratt.
Yesterday, American Nvidia surpassed Microsoft as the highest-valued company in the world, with a value of over 3,000 billion dollars. For shareholders, it's also been a golden opportunity. Just this year, the increase has been 170 per cent, and over five years, the share has increased 35 times in value.
The manufacturer of advanced data processors, the brains behind the increasingly numerous AI services, has explosively grown in value and stock market value over the past year.
Outlook
Nvidia's products have become absolutely necessary for very many companies that want to surf the AI wave. It's almost an infinite demand for Nvidia's chips, says Frida Bratt.
Sales growth has skyrocketed, profitability is sky-high, and profits are building up.
The company has an extremely, extremely strong position, almost a monopoly. Then you can also price the products accordingly, says Frida Bratt.
Risks
There's talk of parallels to the IT bubble around the millennium shift. But today's tech giants are well-managed and profitable companies, unlike what was the case back then, says Bratt.
Yes, Nvidia is, along with a few other AI-hyped companies, extremely highly valued.
Despite this enormous surge in the share, the company is not considered overvalued, she says.
But sooner or later, competitors will probably catch up. However, it's not an easy market to enter. It requires enormous investments to build manufacturers of data chips. But there are, of course, competitors, manufacturers of supercomputers, that threaten Nvidia's current dominance.
And then maybe you have to lower prices. So, it's a threat, perhaps, to this price surge.
Driving the price
The fact that Nvidia has become so highly valued is also a bit of a self-playing piano on the US stock exchange. More or less all equity funds put a large part of their holdings in the chip giant. Index funds are steered towards companies of this size, and thus increase the demand for the company's shares, driving the price to new heights.
But that's not enough as an explanation.
There's really a belief in the market as well. And we see among our customers that there's an enormous explosion of interest in the share, says Frida Bratt.
In the first quarter of this year, Nvidia had 26 billion dollars in revenue, equivalent to 270 billion kronor. That was 262 per cent higher than the same quarter last year.
The profit after tax landed at 14.9 billion dollars (155 billion kronor), up 628 per cent in a year.
Source: Nvidia
The ten highest-valued listed companies in the world (19 June 2024).
Nvidia, 3,335 billion dollars
Microsoft, 3,317 billion
Apple, 3,285 billion
Alphabet (Google), 2,171 billion
Amazon, 1,902 billion
Saudi Aramco, 1,788 billion
Meta (Facebook), 1,266 billion
TSMC, 932 billion
Berkshire Hathaway, 881 billion
Eli Lilly, 847 billion
Source: Companies Marketcap
