News Analysis
Editor's note: This article is not investment or financial advice.
The AI chipmaker NVIDIA has the highest market capitalization of any public company, passing Apple, as of Friday.
NVIDIA’s high-flying stock and current $3.56 trillion market cap are bellwethers of AI’s impact on the marketplace.
Here, we look at what the AI industry can learn from NVIDIA's No. 1 position in the public markets.
Global Investors See Upside in AI
If NVIDIA is one of the biggest symbols in AI, investors are continuing to invest in that symbol, recognizing the value of AI.
The company's stock increase of over 200% year to date correlates with the AI market's growth. The stock closed at $145.26 on Friday.
With 24.53 billion shares outstanding, NVIDIA's market cap represents not only a segment of early adopters and emerging technology investors, but a wide variety of investors — from institutional investors to retail investors — who presumably believe in the company, its vision and the AI hardware and software markets.
AI today isn't only the research-heavy back-end technology of its beginnings. With the global focus on generative AI, it's a mainstream investment category and technology that's being publicly led by the highest-profile stock.
The Financials Pass Inspections
While the relationship between a company's quarterly earnings reports and its stock are far from an exact science, the public markets are set up to use earnings to uncover mission-critical flaws in a company's near-term prospects and longer-term viability. This is seen in sell-offs, fast declining stock prices and plunging market caps.
NVIDIA's quarterly earnings reports in the GenAI period have been widely analyzed and reported, and after inspection, investors are seeing an AI-oriented enterprise with a diverse AI software and hardware portfolio — particularly GPU chips that power compute-heavy AI workloads — that is profitable.
For instance, in its latest quarterly earnings report in August, NVIDIA reported $16.5 billion in net income — a 168% year-over-year increase — and $30 billion in revenue — a 122% year-over-year increase — as well as $34.8 billion in cash, cash equivalents and marketable securities.
While NVIDIA, which went public in 1999, was an established tech company pre-GenAI and a pioneer of GPU chips for gaming, the accelerated computing company is demonstrating a rough model for capturing AI demand and revenue, including AI in factories, medical imaging, autonomous vehicle data centers and edge computing for robotics.
See more: 10 Top AI Chip Companies
Top Market Cap Companies Signal an Economic Age
In the computing era, the companies that rise to among the highest market capitalizations are direct reflections of prevailing demand in the economic period:
- Microsoft's market cap rose as office software rose to ubiquity.
- Google's market cap rose as search rose to ubiquity.
- Amazon's market cap rose as e-commerce rose to ubiquity.
- Apple's market cap rose as mobile rose to ubiquity.
- Meta's market cap rose as social media rose to ubiquity.
Today, NVIDIA's market cap is a measure that AI may, in fact, be approaching ubiquity.
Like each of these companies before it, AI-driven NVIDIA could be in a position to use its institutional technology, market share, cash, scale and client base to retain and grow a top market cap position even as new technologies rise to prominence.
8 of the Top 10 Market Cap Companies are AI Leaders
NVIDIA isn't the only AI company with a notably high market cap.
A group of well-financed tech companies and AI leaders are seeing somewhat similar public market trajectories — and eight of them rank among the top 10 market caps, including NVIDIA, according to CompaniesMarketCap.com.
- NVIDIA (1): AI hardware and software maker; dominating the market for GPU chips that power AI
- Apple (2): Apple Intelligence system for its hardware operating systems
- Microsoft (3): Major investment in OpenAI; Copilot AI assistant line; Azure cloud computing AI products; AI chips
- Amazon (4): Major investment in OpenAI competitor Anthropic; Amazon Q AI assistant; AWS cloud computing AI products; AI chips
- Google (5): Gemini AI foundation model; Gemini AI line; Google Cloud cloud computing AI products; AI chips
- Meta (7): Open-source Llama AI foundation model; Meta AI line; AI chips
- TSMC (8): Chipmaker, including AI chips
- Tesla (9): Developing AI for its vehicle systems
These companies' stocks and market caps are presumably partly driven by the same investor confidence in AI.
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Many of these AI leaders depend on NVIDIA as clients, which underscores NVIDIA's dominance in the AI chip market. However, NVIDIA's share of the AI chip market should erode as more players aggressively enter the AI chip space, including several of its big tech customers.
Significantly, these companies are pivoting to AI and investing heavily in AI, and the public market reception to their moves and related financial results are measures of the young AI market's outsized effects on commerce — which are not only holding, but growing to a dominant level.
See more: 10 Top Publicly Traded AI Companies
