① About eight months ago, shortly after Nvidia's 30th birthday, it became the world's first semiconductor company with a market value of $1 trillion With Nvidia setting a record for a single day increase in stock market value in the history of this planet last night, and not far from the $2 trillion mark in market value, this may soon set another record.
About eight months ago, shortly after Nvidia's 30th birthday, this AI era "shovel seller" became the first semiconductor company with a market value of $1 trillion.
Now, with this highly acclaimed "most important" stock, it set a record for a single day increase in stock market value in the history of this planet last night. It is not far from the $2 trillion mark in market value, which means it is about to set a new record.
After its stock price surged 16% on Thursday, Nvidia's market value increased by approximately $277 billion in just one day, bringing its total market value to $1.96 trillion.
The daily market value growth of Nvidia pales in comparison to the previous record set by Meta three weeks ago - at that time, Meta's market value grew by over $1970 billion in a single day.
What concept is this equivalent to? The daily increase in Nvidia's market value is almost equivalent to the total market value of Netflix. Before the concept of "Magnificent 7", which included Nvidia, was prevalent, FAANG, which included Netflix, was the hallmark of technology giants in the US stock market.
Looking forward to a new record
Perhaps many people could have imagined beforehand that it would be easier for Nvidia's market value to reach the $2 trillion mark than breaking through the first $1 trillion mark in June last year, but the recent rapid rise in its stock price has greatly surprised everyone.
At present, although Nvidia is still one layer away from breaking through the $2 trillion market value barrier, no company has ever crossed the barrier so quickly before.
If its stock price rises slightly tonight, with a milestone leap from $1 trillion to $2 trillion, Nvidia only took eight months. This will be a new record, as Microsoft spent 2 years and 6 months from $1 trillion to $2 trillion, and Apple also took about 2 years.
It's no wonder Sanford C. Bernstein analyst Stacy Rasgon exclaimed overnight, "This company is like printing money. The prospect of sustained growth seems to be still stable."
Looking at the US stock market, Nvidia is currently the third highest valued company after Microsoft and Apple. And what is quite impressive is that even though Microsoft and Apple currently have much higher quarterly revenue than Nvidia, they both have a clear commonality: they also need Nvidia's GPU chips to support their growing ambitions in the field of artificial intelligence (AI).
In fact, almost all AI companies cannot do without Nvidia's GPU support behind their data centers.
In a sense, Goldman Sachs regards Nvidia as the most important stock in the world today, which is not a false statement.
Is Nvidia expensive? Where is it expensive!
Interestingly, with Nvidia's market value skyrocketing, many market participants are now questioning whether Nvidia is too expensive?
You should know that Nvidia's stock price has risen by a cumulative 60% since the beginning of this year, which was achieved against the backdrop of a cumulative increase of nearly 240% throughout last year
However, many Nvidia bulls do not seem to be anxious about the concerns that have emerged in the market - they have found evidence to rely on in the P/E ratio indicator. To apply a current internet meme, it is: "Where is it expensive? It has been at this price (P/E ratio) for so many years, don't talk nonsense with your eyes open.".
A comparison shows that although Nvidia's stock price and market value have surged, its profit growth rate even exceeds the growth of these two companies.
This became even more apparent after Nvidia's impeccable performance report was released this week: in the fourth quarter of the 2024 fiscal year ending on January 28, Nvidia's revenue reached a record high of $22.1 billion, a year-on-year increase of 265%; The revenue for the entire fiscal year also reached a historic high of $60.9 billion, an increase of 126%. In terms of profit, the company recorded a quarterly net profit of 12.285 billion US dollars, a year-on-year increase of 769%; Adjusted earnings per share were $5.16, a year-on-year increase of 486%, both reaching historic highs.
To some extent, it is not Nvidia's profits catching up with market value, but its market value catching up with profit growth. This has triggered an extremely rare phenomenon, where since mid-2023, although Nvidia's stock price has risen to a record, its P/E ratio has continued to decline.
This point can be considered outstanding in the comparison of the "seven giants" of the US stock market in recent years.
At present, Nvidia's dynamic P/E ratio based on earnings per share expectations is about 32 times, while its competitor AMD is 45 times. Amazon and Microsoft also have higher valuation multiples than Nvidia.
The surging profits not only boosted Nvidia's stock price, but also made the market believe that the artificial intelligence boom is still thriving. Against these dazzling halos, the price of the stock doesn't seem expensive. David Wagner, portfolio manager at Aptus Capital Advisors LLC, stated that even considering the significant surge since the beginning of the year, Nvidia remains one of the AI stocks with the lowest valuation ratio.
James Demmert, Chief Investment Officer of Main Street Research, said, "Some investors have been hesitant to buy because they feel the stock price is already too expensive. This is a big mistake. Every time Nvidia releases its results, the P/E ratio drops because the denominator is much larger than people expected."
The reputation and wealth of the "leather clad swordsman" have both been fruitful
As NVIDIA's market value and influence on the AI industry and financial markets continue to grow, Huang Renxun, known as the "leather clad swordsman," is now experiencing a double harvest of reputation and wealth.
The Bloomberg Billionaire List shows that this surge in Nvidia's market is about to allow Huang Renxun to achieve a new breakthrough in his wealth: becoming one of the top 20 wealthiest people in the world.
Huang Renxun's wealth has jumped from $9.5 billion to $69.2 billion in just one day on Thursday. This change will enable him to surpass Charles Koch and Zhong Gui to rise to 21st place on the Bloomberg Billionaires Index. For this NVIDIA co-founder, this is a remarkable improvement, as at the beginning of last year, he only ranked 128th with a net asset value of $13.5 billion.
According to public information, 61 year old Huang Renxun holds a 3.1% stake in NVIDIA.
In fact, the growth of wealth is only one aspect. After NVIDIA became a leading AI stock, Huang Renxun's position in the US technology and corporate circles is now just like that of Sun Zhongtian. Jim Cramer, an influential American financial host, recently stated that he believes Huang Renxun has more foresight than Musk.
"I think Musk can see a turning point in the industry, but Huang Renxun is thinking about how to change the overall situation that affects the world. Huang Renxun alone initiated an industrial revolution. Musk, on the other hand, brought innovative products alone. Undoubtedly, they are all talented, but who can do all of this better to initiate an industrial revolution?" Cramer said.
Previously, Cramer compared Huang Renxun to American pop diva Taylor Swift, believing that both were unmatched in their respective fields.
Wade Bush senior stock analyst Dan Ives also praised that Huang Renxun is becoming the godfather of AI, and Nvidia's Q4 performance is the most important corporate financial report in many years. From the perspective of peak demand and other factors, this AI party has just begun.
He said that this wave of massive spending will flow to other technology companies, "in our view, it will continue to drive up the technology bull market.". In the next two to three years, companies such as AMD may also participate in the competition, but currently Nvidia is the "only player", and the company's stock price may eventually rise to four digits.