NVIDIA outshines Amazon and Tesla with $2.5 trillion market cap
NVIDIA, a leading hardware manufacturer for 3D gaming, and AI-powered graphic processing units (GPUs), has experienced a significant increase in its market capitalization, reaching $2.5 trillion. This figure surpasses the combined market value of Tesla and Amazon, two globally recognized tech giants. From just over $150 billion at the beginning of January 2020, NVIDIA's market cap has grown exponentially. It is nearing the brink of surpassing Apple and Microsoft, currently the world's largest companies by market capitalization.
Strategic pivot fuels exponential rise
NVIDIA's rapid growth is largely due to its strategic shift toward capitalizing on the surge in artificial intelligence (AI). The company has been producing chips that assist data centers in developing chatbots and other tools, significantly boosting its financial performance. In the first quarter ending May 2021, NVIDIA clocked a revenue of $5.66 billion, which nearly quintupled to $26 billion three years later. CEO Jensen Huang views this trend as the "start of a new industrial revolution."
NVIDIA's AI-powered GPUs drive revenue growth
NVIDIA's biggest clients for its AI-backed GPUs include Amazon Web Services, Microsoft Azure, Google Cloud, and Oracle Cloud. These tech giants contribute to 45% of NVIDIA's overall revenue. Huang believes that AI is bringing significant productivity gains across industries and expanding revenue opportunities. The company forecasts another 100% jump in its revenue for the second quarter, with a projected $28 billion revenue guidance surpassing every analyst estimate on the street.
NVIDIA's expansion plans and continued success in gaming
Huang plans to expand into countries wanting to create their own AI models, a concept he refers to as "Sovereign AI." Recently, Swisscom Group, majorly owned by the Swiss government, said that its Italian subsidiary would build Italy's first supercomputer powered by NVIDIA. Despite the shift toward AI, NVIDIA's gaming business continues to thrive, with gaming processors bringing in $2.6 billion in revenue this quarter. The company's share price has also grown from $50/share during March 2020 to $1,000/stock yesterday.
