NVIDIA’s Stock (NVDA.O) Surges: A Brief Visit to the Trillion-Dollar Club

NVIDIA’s (NVDA.O) Brief Trillion-Dollar Club Visit

Through relentless research and development efforts with repeated innovative technology releases, NVIDIA has played a significant role in advancing and accelerating the global development of advanced computing and artificial intelligence (AI). Since the founding of NVIDIA in 1993, NVIDIA has never stopped growing; it offered its initial public offering in 1999, joined the S&P 500 in 2001, and joined the S&P 100 in 2018. With the release of ChatGPT in November 2022 sparked the global AI boom, NVIDIA’s stock listing on Nasdaq has almost quadrupled as of the time of this article’s publication since its low in October 2022.

On May 25th, 2023, NVIDIA’s stock (NVDA.O) experienced a remarkable surge of approximately 25% in a single day, reaching just below USD$380. This surge in stock price led to an increase in NVDA.O’s market capitalization (market cap) by nearly USD$200 billion within 24 hours, closing at USD$938.11 billion. This significant event positioned NVIDIA as a potential candidate to become the first chip stock to join the Trillion Dollar Club.

Within a week, on May 30th, 2023, NVDA.O briefly took a tour of the Trillion Dollar Club before closing just below the threshold at its all-time high. To highlight the magnitude of this achievement, only four other U.S. companies currently have a market cap exceeding USD$1 trillion: Alphabet Inc. (GOOGL.O), Amazon.com Inc. (AMZN.O), Apple Inc. (AAPL.O), and Microsoft Corporation (MSFT.O). NVIDIA is one of the best-performing stocks on the S&P 500 in May 2023. So far, the four companies in the Trillion Dollar Club and NVIDIA combined account for over 95% of the S&P 500 gains this year.

The table below compares some stock valuation measures of NVIDIA with the four American Trillion Dollar Club businesses.

NVIDIA Corporation: A Short Introduction and Notable Achievements

NVIDIA Corporation is a prominent fabless multi-national American technology firm specializing in software and chips, focusing on utilizing its advanced graphics cards technology to solve high-performance computational problems. It was founded in 1993 by Jensen Huang, Curtis Priem, and Chris Malachowsk. Headquartered in Santa Clara, California, NVIDIA has made a long-lasting impact in the world of computing. In 1999, it revolutionized computer graphics with the release of the commercially available graphics processing unit (GPU), GeForce 256. Since then, NVIDIA has continuously introduced groundbreaking GPU technologies, particularly in the field of deep learning.

NVIDIA’s few noteworthy breakthrough achievements include:

2007: Compute Unified Device Architecture (CUDA) enabled GPUs for general-purpose computing.

2012: Tesla K20X GPU, the first GPU designed specifically for deep learning, entered the market.

2017: Volta Architecture, featuring Tensor Cores, significantly enhanced deep learning performance.

2020: Ampere Architecture, incorporating the 3rd-Generation Tensor Cores, further accelerated deep learning applications, reducing AI training times from weeks to hours.

NVIDIA (NVDA.O): Warren Buffet & Jim Cramer

Warren Buffet and Berkshire Hathaway’s Investment Strategy

Warren Buffet is an esteemed figure in the financial world; many people closely follow the investment portfolio activities of his firm, Berkshire Hathaway. In Berkshire Hathaway’s 2013 Annual Report to the U.S. Securities and Exchange Commission, Buffet discussed Charlie Munger and his investment strategy’s decision-making process.

“When Charlie and I buy stocks … our analysis is very similar to that which we use in buying entire businesses. We first have to decide whether we can sensibly estimate an earnings range for five years out, or more. If the answer is yes, we will buy the stock (or business) if it sells at a reasonable price in relation to the bottom boundary of our estimate. If, however, we lack the ability to estimate future earnings — which is usually the case — we simply move on to other prospects. In the 54 years we have worked together, we have never foregone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.”

This may explain why Berkshire Hathaway’s public portfolio currently does not include any NVDA.O.

Message from Jim Cramer’s

On the other hand, Jim Cramer, a renowned American television personality and founder of Cramer Berkowitz, shared his opinion and perspective on NVIDIA via Twitter on May 30th, 2023.

“I know there are people who are deriding the valuation of NVIDIA. But the valuation is more of an art than many would like. If NVIDIA is right, then every major company, save Apple, is dependent on it. Every one. What is that worth? The subject is daunting. Humbling.”

The question remains whether NVIDIA will regain its membership in the Trillion Dollar Club. Is this AI boom a short-term hype triggered by the release of ChatGPT, or is this the beginning of a bubble? The future will reveal the answer.

Writer: Sebastian Chen