Nvidia became the first company to reach a market value of $5 trillion last week, cementing its position as the largest and potentially most influential stock in Wall Street history, as the chipmaker at the heart of the artificial intelligence revolution continues to reshape global financial markets.
The Santa Clara, California-based company now accounts for 8.5 per cent of the S&P 500 Index — more than the bottom 240 firms combined and likely a record for any component, reports Bloomberg.
Nvidia is larger than six of the 11 sectors in the S&P 500 and worth more than the entire equity markets of most countries, including the Netherlands, Spain, the UAE and Italy. The company trails only the US, China, Japan, Hong Kong and India in market capitalisation.
“This is obviously a massive outlier from a historical perspective, really something to behold for the ages,” said Matt Miskin, co-chief investment strategist at Manulife John Hancock Investments.
Sovereign clouds and industrial AI
The chipmaker’s momentum continued this week with the announcement of a historic partnership in South Korea involving the deployment of 260,000 Nvidia GPUs across the country’s sovereign clouds and industrial AI factories. The initiative, unveiled by Invidia CEO Jensen Huang at the APEC Summit in Gyeongju, marks one of the largest national investments in AI infrastructure to date.
Samsung Electronics, SK Group and Hyundai Motor Group will each build AI factories with up to 50,000 Nvidia GPUs, whilst NAVER plans to deploy more than 60,000 GPUs. The Korean government’s Ministry of Science and ICT will deploy as many as 50,000 GPUs through cloud providers, with an initial wave of 13,000 Blackwell GPUs.
“It’s vital that we build the ecosystem, not just the AI infrastructure, of Korea,” said Huang.
The deals underscore surging global demand for AI infrastructure. Microsoft, Amazon, Meta Platforms and Google are pledging to boost combined capital spending 34 per cent to roughly $440 billion over the next 12 months. Those outlays have driven Nvidia’s revenue projections to $285 billion in its next fiscal year, up from just $11 billion in fiscal 2020.
Samsung will utilise Nvidia technology to build digital twins for semiconductor manufacturing and expand its robotics portfolio, while Hyundai Motor Group will deploy the GPUs for AI model training in manufacturing, autonomous driving, and robotics. NAVER is targeting sovereign and physical AI workloads, including industry-specific models for shipbuilding and security.
Nearly all Wall Street analysts remain bullish on the stock, with about 91 per cent giving it a buy-equivalent rating. HSBC analyst Frank Lee recently raised his price target to a Street-high of $230 — translating to a market capitalisation close to $8 trillion.
However, one analyst maintains a contrarian view: Seaport Global Securities analyst Jay Goldberg has held a sell rating since April with a Street-low price target of $100. The stock has more than doubled since then.
Huang’s net worth has ballooned alongside the rally, hitting $176 billion and making him one of the world’s 10 wealthiest people. Huang owns about 3.5 per cent of the company in his own name and in family trusts.
Despite growing chatter about a stock market bubble surrounding AI, Huang downplayed concerns about euphoria at the company’s annual GTC conference last week, whilst Federal Reserve Chair Jerome Powell dismissed comparisons to the dot-com era during his press conference on Wednesday.
“Trends like this reach a climax point and reverse, and we expect that will happen eventually,” said Miskin. “Still, it does feel like the S&P 500 is putting a lot of eggs into one basket.”
