Nvidia made headlines on Wednesday by becoming the first company to reach a market capitalization of $4 trillion, surpassing that milestone when its shares climbed to $163.93 in early trading. The stock even peaked above $164 during the day but ultimately closed up 1.8% at $162.88—just shy of that "magic number," yet still marking a record close.
This achievement adds to the impressive saga of one of the most talked-about stocks in recent years. Nvidia, which first crossed the $1 trillion threshold in 2023, followed up by hitting $2 trillion and $3 trillion last year, has seen its shares soar over 20% in the past year and an astonishing 1,400% over the last five years. The company’s success has been largely fueled by the rise of generative AI, with its GPUs powering data centers and AI innovations.
Demand has been skyrocketing from major players like Meta, OpenAI, and Alphabet, all racing to create cutting-edge chatbots and large language models. Nvidia’s chips, including the Hopper H100 and the newer Blackwell B200—boasting 208 billion transistors—come with a hefty price tag of tens of thousands of dollars each and tend to sell out fast. The company’s revenue skyrocketed from $7.2 billion two years ago to a staggering $44.1 billion this year, with a gross margin exceeding 70%.
Founded in 1993 by Jensen Huang to enhance PC graphics, Nvidia quickly invested in software, broadening its chips' applications beyond gaming into scientific computing, data centers, and AI. Now, its rapid development cycle aims to roll out a new generation of chips every year. However, U.S. export controls have restricted sales of its most powerful AI chips in China, leading to a $5.5 billion write-down this year as competitors like Huawei step in to fill that gap. Despite these hurdles, Wall Street remains optimistic: Visible Alpha reports a mean price target of $174, with nearly all analysts giving it a "buy" rating.
Apple and Microsoft are also hovering near the $4 trillion mark, with Apple recently closing at $3.915 trillion and Microsoft at $3.708 trillion. Analyst Dan Ives anticipates that Microsoft will join the $4 trillion club this summer and believes the next big milestone will be $5 trillion, driven by the ongoing AI revolution.