During trading hours on June 5, 2024, processor maker, Nvidia, surpassed the $3 trillion valuation mark, and became the second most valuable public company in the world, ahead of Apple Inc.
Nvidia’s stock posted a 5.16% gain during trading hours to close at $1,224.40, from $1,164.37 the previous day.
Microsoft continues to be the world’s most valuable public company, with a market capitalization of $3.15 trillion. However, Nvidia is close with a $3.01 trillion valuation.
With a market capitalization of $3.01 trillion, and Nigeria’s GDP projected to hit $253 billion by 2024 end, the company’s valuation is about 12 times the size of the Nigerian economy.
Nvidia Corporation, which is relatively less known than Alphabet (Google), Amazon, Hewlett Packard, Meta, Tesla, is at the forefront of next generation computing.
The company, through its AI-powered cloud services, AI microchips, data center GPU, and other heavy computing devices is the world’s leader in advanced IT architecture.
In 2024, NVIDIA has been one of the most trending names in the global capital markets, due to the incredible gains, as well as exceptional financial performance. Thus, here are five things to note about Nvidia.
- Brief history of Nvidia
Nvidia was founded in 1993 by CEO, Jensen Huang, Chris Malachowsky, and Curtis Priem. The founders had a vision of introducing 3D graphics to computer graphics and taking accelerated computing to the next level. They had their first contract with Japanese gaming company, Sega to build the graphics chip for the Dreamcast gaming console.
By 1999, Nvidia developed its first GPU product for sale, GeForce 256, and it was a commercial success. In the same year, the company went public, listing on NASDAQ with a share price of $0.44.
Nvidia is the world’s leading producer of GPUs used in data centers and high-end computing devices. The company has ventured into AI chip making, and currently boasts a customer base of over 1,600 generative AI companies.
In May 2023, Nvidia crossed the $1 trillion valuation mark for the first time ever, as its share price hit $401.11. Before then, only Apple, Alphabet Inc (Google), Microsoft, and Amazon hit had the $1 trillion mark.
In June 2023, Nvidia comfortably settled in the $1 trillion valuation region. However, it continued a massive run, hitting the $2 trillion market cap in February 2024. It then crossed the $3 trillion mark on June 5, 2024.
- Nvidia is the top gaining stock on NASDAQ this year
Having recorded a year-to-date gain of 147.2%, Nvidia is the fastest gaining stock on NASDAQ 100 this year. With a share price of $1,224.40 as of close of trading on June 5, the stock has advanced well beyond the $481.68 it started 2024 with.
Nvidia stock overwhelmingly outperforms the NASDAQ Composite Index, which has posted a year-to-date gain of 16.40%. In one year, Nvidia posted a gain of 226.72%, as it closed June 6, 2023, with a share price of $374.75.
This is significantly higher than the gains posted by other companies within the $1 trillion valuation mark. Apple Inc has posted a 5.42% YTD gain, Meta Inc, 43.56% YTD gain, Alphabet, 27.44% YTD, and Amazon, 22.16% YTD gain, and Microsoft Inc with a 13.99% YTD gain.
- The company’s financial performance for FY 2024
During the fiscal year ending March 31, 2024, Nvidia posted a revenue of $60.9 billion, which marks a 126% growth from the previous fiscal year. It also posted a 681% growth in its operating income to $33 billion, representing an operating margin of 54.2%.
Nvidia’s financial performance in the fiscal year was driven by a 217% growth in its data center revenue. The company recorded $47.5 billion from the sales of Graphic Processing Units (GPUs) and InfiniBand used in data centers.
- Nvidia has a strong future prospect
It is quite notable that there is a boom in the data center market, as the number of internet-connected devices continues to increase, as IoT analytics put the number at 16.7 billion. As the data center industry booms, it is expected that Nvidia’s revenue will also boom.
Nvidia is the leading supplier of GPUs, a critical element in data center. The company is also reputed to have a 98% share in the data center GPU market.
Another strong prospect for Nvidia is its high-power GPU which is used to power generative AI companies. Currently, ChatGPT runs on Nvidia’s H100 graphics cards, while the company provides AI infrastructure for cloud services such as Google Cloud and Amazon Web Services.
Speaking on the company’s strong performance in the past fiscal year, the CEO, Jensen Huang, highlighted the shift from traditional data centers to AI-powered data centers.
“Companies and countries are partnering with Nvidia to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center − AI factories − to produce a new commodity: artificial intelligence.”
- Nvidia share is now “too large”, to be split into ten
Considering the growing size of its share price, Nvidia’s board decided to carry out a 10-for-1 stock split. Essentially, shareholders will receive nine new stocks for every one they hold.
This stock split would be carried out on June 7, 2024, and trading on the split stock basis would commence on June 10.
The company noted “make stock ownership more accessible to employees and investors” as the reason for the stock split. With a share price of $1,224.40, the stock split would result in a new share price of $122.44, which is more accessible to investors.
It would also increase the company’s outstanding shares from 2.46 billion shares to 24.6 billion.