Nvidia has crossed the $5 trillion line, becoming the first company in history to ever reach that value.
The chipmaker’s rise has shaken not just Wall Street but also the structure of the global economy. It has grown so large and powerful that entire markets now move in reaction to its earnings and outlook.
The company is no longer just part of the system; it is the system.
Nvidia’s surge has made it larger than six of the eleven sectors in the S&P 500 Index and more valuable than most national stock markets. Its influence now stretches far beyond technology, shaping how capital flows, how governments plan industrial policy, and how investors define risk.
“This is obviously a massive outlier from a historical perspective, really something to behold for the ages,” said Matt Miskin, co-chief investment strategist at Manulife John Hancock Investments.
Nvidia drives markets as AI spending explodes
Since the start of 2023, Nvidia has been the main engine behind the market’s rally, minting billions for shareholders and turning CEO Jensen Huang into one of the world’s richest men.
Just last week, the company announced new deals with Nokia, Samsung Electronics, and Hyundai Motor Group, tightening its grip across sectors that depend on advanced chips.
Tech giants Microsoft, Amazon, and Meta have all promised to spend even more on AI infrastructure, with combined capital outlays expected to climb 34% to $440 billion over the next year, according to Bloomberg data.
Those investments are the reason Nvidia’s revenue forecast has exploded from $11 billion in 2020 to a projected $285 billion in the next fiscal year.
At Nvidia’s GTC conference, Jensen tried to calm worries about a bubble, saying the enthusiasm was justified by technological progress. Federal Reserve Chair Jerome Powell, during his press conference on Wednesday, also pushed back on comparisons to the late-1990s dot-com mania. But the sense of imbalance is hard to ignore.
“Trends like this reach a climax point and reverse, and we expect that will happen eventually,” Miskin said. “For the time being, companies at the epicenter of the AI race are doing the best in terms of earnings. Still, it does feel like the S&P 500 is putting a lot of eggs into one basket.”
Analysts split as Nvidia towers over global markets
As the largest company in the world, Nvidia now makes up 8.5% of the S&P 500, a share greater than the bottom 240 firms combined, according to Howard Silverblatt of Standard & Poor’s.
Apple’s record weight once peaked at 7.7%, and Microsoft’s at 7.4%, but both now sit behind Nvidia. Together, the seven biggest U.S. tech stocks hold more than 36% of the entire S&P 500’s value.
Globally, Nvidia’s size dwarfs many economies. It’s worth more than the stock markets of the Netherlands, Spain, the UAE, and Italy combined, and trails only the U.S., China, Japan, Hong Kong, and India.
Nearly 91% of Wall Street analysts rate it a buy. HSBC’s Frank Lee recently lifted his price target to $230, implying a potential $8 trillion market cap.
Still, one holdout remains: Jay Goldberg of Seaport Global Securities, who’s kept a sell rating since April with a $100 target, even as the stock more than doubled.
While most large firms slow down after reaching massive scale, Nvidia hasn’t. It expects 60% revenue growth this fiscal year after two years of 126% and 114% jumps. By comparison, Microsoft is forecast to grow 15%, and Apple just 6.2%. Jensen’s fortune now sits at $176 billion, up more than $60 billion this year alone, according to the Bloomberg Billionaires Index.
He owns 3.5% of Nvidia through personal and family trusts, filings with the SEC show.
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Source: https://www.cryptopolitan.com/nvidias-dominance-a-risk-to-global-economy/
