- Nvidia has managed to grow its total market capital by $1 trillion in just 67 days.
- Share prices have increased steadily. Just this Thursday (7th March), it rose by 4% and reached $926.
- If the prices keep going up, the stocks might go through another split just like in 2021.
Nvidia has had an amazing start to the year. It’s just the third month and its market capital has already increased by $1 trillion in this year alone — almost double of Tesla’s entire market cap.
The credit for this tremendous growth goes to the increasing demand for AI chips in the industry and Nvidia is one of the biggest manufacturers of chips. As per reports, Nvidia’s sales more than doubled last year, and if estimates are to be believed they’ll keep growing throughout 2024.
The profits have also (obviously) filled the pockets of the CEO and co-founder Jensen Huang. In the last 4 years, his net worth went from less than $9.6 billion to $70 billion.
The company has actually changed its business model over the years. It started out as a manufacturer of gaming units, which it still is, but last year, its gaming revenue went from 53% of its total revenue to just 17%.
On the flip side, its AI data center’s revenue jumped to 78% from 25%. It’s clear that Nvidia is aligning its business model with the AI boom, hence the profits. It recently introduced a generative AI chatbot, Chat with RTX, to Windows users.
Nvidia’s unprecedented growth is even more surprising because its competitors are not doing all that great.
Tesla, for instance, has experienced a decrease in the demand for its electrical vehicles. Plus, the growing competition from Chinese companies that are somehow managing to offer the same product for cheaper is forcing US manufacturers to slash their prices.
Apple is also facing similar stiff competition from its Chinese contemporaries. The sales of iPhones have been rather disappointing this year, and considering the competition in the auto industry, Apple decided to cancel its electrical vehicle project. What’s more, according to reports, it was also a tough task convincing Apple investors for the new Apple Vision Pro.
Read More: EU regulators fine Apple $2 billion for breaking competition rules
Nvidia’s share prices are growing. This Thursday, its share price increased by 4% and reached $926 which in turn brought its total market capital to a staggering $2.28 trillion.
It’s at a point in the market where we can expect another share split, just like the one we saw in 2021. During that time, the stocks had reached $600 per share so the company decided to split and offer it four-for-one.
Probably in the next year or so, I expect the stock to split and that would be able to get some small retail investors into the stock where they think it’s out of reach right now.Ken Mahoney, Mahoney Asset Management
The reason why stock splits are important is because they allow small investors to buy Nvidia shares and participate in the company’s growth. In a process like this, the fundamental valuation doesn’t change but the equity is simply redistributed over more stocks.
However, all of this is just speculation. Nvidia is still smashing records and has not announced any definite plans to split its stocks at the time of writing.
