Nvidia is now the most valuable company in the world

Rise to $3.34 Trillion Market Cap

Nvidia, the chip-maker, ascended to become the world's most valuable company as its share price reached a record high on 18th June. Its market capitalization now stands at $3.34 trillion (£2.63 trillion), nearly doubling since the beginning of this year. By the end of the trading day, the stock had reached nearly $136, marking a 3.5% increase and surpassing the valuation of fellow tech giant Microsoft. Earlier this month, it had already exceeded Apple in value.

Before rising to prominence in the corporate world, Nvidia began as a fledgling startup envisioned by CEO Jensen Huang, along with co-founders Chris Malachowsky and Curtis Priem, brainstorming the idea in a Denny's booth. Established in 1993, the company quickly pioneered one of the earliest GPUs (graphics processing units), initially targeted for applications in video games and graphic design.

Nvidia Corp (NASDAQ:NVDA) President and CEO Jen-Hsun Huang has sold a significant portion of his holdings in the company, according to recent filings. The transactions, which took place on June 17 and 18, amounted to a total of over $31 million. Despite these sales, Huang remains a significant shareholder of Nvidia, holding millions of shares directly and indirectly through various trusts and partnerships, as disclosed in the filing's footnotes. The transactions were executed under a pre-arranged Rule 10b5-1 trading plan established by Huang on March 14, 2024. This plan permits company insiders to sell shares at scheduled intervals, mitigating the risk of insider trading allegations.

Investors often scrutinize insider transactions for insights into executives' confidence in their company's future prospects. However, such sales can also be part of routine financial planning or efforts to diversify holdings. Factors such as Nvidia's stock performance and broader market conditions may further influence these decisions.

Dominate the AI Market

The AI chip giant is now joining Microsoft's initiative to assist chip manufacturers in developing Arm-based processors for Windows PCs. Microsoft's strategy is aimed at countering Apple, which has significantly increased its market share in the past three years following the launch of its in-house Arm-based chips for Mac computers, according to preliminary third-quarter data from research firm IDC. Nvidia's success in dominating the AI market was attributed to strategic decisions made by CEO Jensen Huang years ago, as highlighted by Baird semiconductor senior research analyst Tristan Gerra to Fortune. One pivotal move was the development of CUDA, a high-level programming tool introduced by the company in 2007. CUDA proved instrumental in harnessing the full potential of Nvidia's GPUs in a user-friendly manner, setting the stage for its leadership in AI technologies.

Nvidia's position as the most valuable company in the world signifies its profound impact on various fronts, including investment opportunities aligned with its market leadership. Nvidia's influence on financial markets extends across stocks, forex, cryptocurrencies, and indices due to its leadership in semiconductor technology, partnerships with major tech firms, and its role in shaping trends and sentiment within these markets. Investors and traders often monitor Nvidia closely for insights into broader market movements and investment opportunities within the technology and related sectors.

Nvidia AI GPUs Are Flowing Into China

Nvidia is on course to sell $12bn worth of artificial intelligence chips in China this year despite US export controls, demand for these powerful chips remains high despite restrictions. Nvidia supplies its data center processors to third-party companies such as Dell, HPE, and Supermicro, who assemble and sell AI servers. Occasionally, these companies order more processors than necessary and subsequently sell surplus units through unofficial channels. While all companies assert compliance with U.S. export regulations and take action against illicit activities if identified, they acknowledge challenges beyond their oversight, including sales to smaller value-added resellers. An estimate suggests about 12,500 AI chips are smuggled annually, while Nvidia sold over 2.6 million A100 and H100 chips globally last year. According to The Wall Street Journal this week, chips are entering China through couriers such as a Chinese student who, in November, transported six Nvidia A100 GPUs from Singapore to China. The student, who remains unnamed, allegedly stated that he was paid approximately $100 per GPU for smuggling them into the country, significantly below their market value. Since tech companies in China are still not able to develop their own high-end AI chips, the black market for Nvidia's advanced products will likely continue.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.