No company has moved from an equity value of $1tn to $2tn as quickly as Nvidia. The chip designer doubled its market cap in less than nine months. The boom in generative artificial intelligence means demand for Nvidia chips still exceeds supply. But hitting the $3tn milestone is proving more difficult.
To some investors, AI hype has inflated valuations beyond reason. Michael Burry, whose short against the housing market was made famous in The Big Short, bet against semiconductor stocks last year. Cathie Wood’s Ark Invest dropped Nvidia in early 2023, claiming the market was pricing in too much optimism.
Yet compare Nvidia’s position with the company’s own market history and its valuation does not look stretched. The stock trades at 35 times expected earnings, down from 55 times at the start of 2022. Considering the size of its potential market and the pricing power it wields, Nvidia has a shot at becoming the most valuable stock in the US.