It’s a little weird to think a business that many people have never heard of or bought anything from — and has a name they don’t know how to say — could soon become the world’s most valuable company.Nvidia stock has surged more than sixfold since the start of last year, catapulting the chipmaker’s value to almost $2.8 trillion. It’s now worth more than Amazon (about $1.9 trillion) and Alphabet ($2.1 trillion), and could soon leapfrog Apple ($2.9 trillion) and even Microsoft ($3.1 trillion).The semiconductor giant sticks out from its Big Tech peers, whose products are so integral to daily life. People work, play, and communicate on their iPhones, iPads, and MacBooks. They search on Google, watch YouTube videos, and use Gmail.
An iPad Pro user at Milan Fashion Week.
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They scroll Facebook, post on Instagram, and chat on WhatsApp. They shop on Amazon, read books on Kindles, and watch movies and TV shows on Prime Video. They use Windows PCs, rely on applications like Word and Excel, and game on Xbox consoles.It’s a similar story with non-tech titans like Warren Buffett’s Berkshire Hathaway, which is worth $870 billion or less than a third of Nvidia. The famed investor’s conglomerate owns consumer brands like Geico, Duracell, and Dairy Queen, and holds large stakes in Coca-Cola, Kraft Heinz, and other public companies.
Buffett himself has trumpeted the power of Apple’s brand, and how indispensable its products are, as key reasons why he made the tech titan his top holding.By contrast, Nvidia isn’t a household name among people who don’t follow the tech sector or stock market. Excluding gamers and computer hobbyists, its products don’t touch everyday life in the same way as other mega-cap companies and thus lacks their cultural cachet.Nvidia ranked 117th on BrandFinance’s annual ranking of global brands in 2023. It jumped to 30th spot this year, but still trailed the likes of Allianz and UnitedHealthcare. Apple, Microsoft, Google, and Amazon took the top four spots.
Jensen Huang is CEO and cofounder of Nvidia.
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Huge demandOf course, Nvidia’s monster valuation is pricing in investors’ expectations that it will become critical to society in the future. They’re betting its chips will be vital to the artificial-intelligence revolution, and become ubiquitous in smart devices and the data centers connecting them.Nvidia’s graphics chips may be niche among consumers, but there’s huge demand for them from companies such as Meta. As a result, Nvidia’s revenue more than doubled to $61 billion last year, fueling a nearly sevenfold rise in net income to $30 billion.For comparison, Apple’s sales hit $383 billion and profits were $97 billion last financial year, but it’s growing far more slowly.It’ll be fascinating to see whether Nvidia becomes a major consumer brand over time, or keeps powering other companies’ AI efforts while largely staying out of the spotlight.
