Nvidia's market cap is larger than all but 7 of world's top economies

Nvidia, the world's most valuable chipmaker, rallied over 9% to close above $1,000 per share for the first time as investors cheered its better than expected first quarter earnings. On Thursday, Nvidia stock ended at $1,037.99 as shares surged 9.3%, taking its market capitalisation to over $2.55 trillion. With this, the company's valuation has become larger than the GDPs of all but seven of the world's biggest economies.

According to 2023 GDP data from the World Bank, the countries whose GDP is bigger than the chipmaker's market cap are the US ($25.46 trillion), China ($17.96 trillion), Japan ($4.23 trillion), Germany ($4.07 trillion), India ($3.38 trillion), the United Kingdom ($3.07 trillion), and France ($2.78 trillion).

Driven by the recent rally, the market cap of Nvidia surpassed the economy of Russia, the world’s eighth largest with GDP of $2.24 trillion. Canada is the ninth largest economy with a GDP of $2.14 trillion, followed by Italy at the tenth spot with  a $2.01 trillion GDP.

Shares zoom 3-fold in one year

In the last one year, the stock price of Nvidia has zoomed over 3-fold from its 52-week low of $298.06 to an all-time high of $1,063.20 in intraday trade on May 23. The NASDAQ-listed stock has risen 117% in the past six months and 30% in the last one month.

The rally in the stock of U.S.-based technology company can be attributed to its strong financial performance and growing demand for artificial intelligence (AI) chips. Jensen Huang, founder and CEO of Nvidia, during the March quarter’s earnings call said that the company plans to make new AI chips every year instead of once every two years. The company released its Q1 results on May 22.

Q1 earnings beats estimates

In Q1 of FY25, Nvidia reported revenue at $26 billion, up 18% from the previous quarter and up 262% from a year ago. For the quarter, GAAP earnings per diluted share was $5.98, up 21% QoQ and up 629% YoY. Non-GAAP earnings per diluted share stood at $6.12, up 19% from the previous quarter and up 461% from a year ago.

The company also announced a 10-for-1 forward stock split, which will begin trading on a split-adjusted basis at market open on June 10. This means each holder of Nvidia’s common stock will get nine additional shares which will be distributed after market close on Friday, June 7.

The company has also announced an increase in its quarterly cash dividend by 150% from $0.04 per share to $0.10 per share of common stock. The increased dividend is equivalent to $0.01 per share on a post-split basis and will be paid on Friday, June 28, 2024, to all shareholders of record on Tuesday, June 11, 2024, as per the company’s earnings release.

Nvidia’s CEO Jensen Huang said that the companies and countries are partnering with the company to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center - AI factories - to produce a new commodity, artificial intelligence.

“We are poised for our next wave of growth. The Blackwell platform is in full production and forms the foundation for trillion-parameter-scale generative AI,” says Huang.

“Nvidia NIM is our new software offering that delivers enterprise-grade, optimized generative AI to run on CUDA everywhere — from the cloud to on-prem data centers and RTX AI PCs — through our expansive network of ecosystem partners,” Huang adds. 

Going ahead, Nvidia expects second quarter revenue to be around $28 billion, plus or minus 2%, while GAAP and non-GAAP gross margins are expected to be 74.8% and 75.5%, respectively, plus or minus 50 basis points. For the full year, gross margins are expected to be in the mid-70% range.

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