Surpassing Amazon and Alphabet, Nvidia joins Apple and Microsoft in the $2tn market cap club

Nvidia, who both produces graphics card and supplies chips for artificial intelligence, has reached a remarkable milestone, becoming the third American company to secure a market cap of over 2 trillion dollars, according to Bloomberg.

The rationale behind such robust growth is clear, the buoyant data from the previous quarter. After announcing financial results, the market value of the company increased by around £36 billion to £1.44 trillion - just two days prior the value was £1.2 billion. Thus, nVidia joined the select circle of enterprises with a market value exceeding 2 trillion dollars, alongside Apple and Microsoft.

Nvidia has already, and notably, surpassed commerce behemoth Amazon and Alphabet, Google's parent company, by around £136 billion.

Quarterly results from the tech giant were announced on Wednesday evening in Greenwich time. They exceeded the analysts' expectations in both revenue and profits. Nvidia had £3.7 adjusted earnings per share in the fourth quarter. It was forecasted for earnings per share to reach £3.33. A year before, earnings per share was 41 pence.

The company's net profit rose by 769 percent year on year, from £1.01 billion to £8.83 billion at the end of December 2023.

Mark Haefele, director of investment at UBS Global Wealth Management, is confident about the reasons behind the rise of the tech company. - Generative artificial intelligence will be the decade's stock market growth theme, and Nvidia's earnings report shows the current strength of AI infrastructure spending. We believe that in addition to technology, investors should also prepare for a potential extension of the stock rally, which could result from a combination of Fed rate reductions, continued strong GDP growth, and decreasing inflation - he explains.

Nvidia reaps the benefits of the tech industry's trend for large artificial intelligence models, which are constructed on this company's premium graphics processors.

Sales in Nvidia's Data Center, now the primary source of Nvidia's revenue, have risen by 409 percent, to £13.22 billion. The firm's gaming business, encompassing graphics cards for laptops and PCs, has increased by 56 percent year on year.

Gaming graphics cards were once Nvidia's principal business, before the growth of its AI chips, and certain Nvidia graphics cards can be utilised for artificial intelligence.