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AI GPU designer NVIDIA Corporation made history today by becoming the first company in history to cross a $4 trillion market capitalization before slightly dipping below it. NVIDIA's achievement follows a surge in its shares in June after a massive crash in January that saw the firm bleed $600 billion in market capitalization after investors fed the shares, worrying that China's DeepSeek had demonstrated cost-effective GPU use that could cull the demand for NVIDIA's GPUs.
NVIDIA's $4 Trillion Market Capitalization Is Just The Beginning, Says Investment Bank
June was a strong month for NVIDIA's shares as they benefited from bullish analyst estimates for medium-term AI demand. NVIDIA continues to enjoy a dominant role in the AI ecosystem courtesy of its GPUs, which lead the market in terms of performance and are among the most highly sought products in the world.
The criticality of NVIIDA's GPUs was evident in a fresh note from Wedbush, which came just as the firm crossed the $4 trillion market capitalization milestone. Calling NVIDIA's AI chips "the new gold and oil," the investment bank posits that $4 trillion is just the start and investor attention will focus on $5 trillion over the next 18 months. Wedbush adds that NVIDIA might not be the only $4 trillion company, as it might be joined by software giant Microsoft.
NVIDIA's shares have stayed resilient despite US sanctions on China, which have hurt the firm's revenue. The robust performance is partly due to CEO Jensen Huang pivoting to sovereign AI after the Chinese restrictions to assure investors that NVIDIA can sell its chips to other countries as well.
Like NVIDIA, Microsoft's shares were also laggards at the year's start. The stock had struggled since mid-2024 after investors were left wondering whether the software company could adequately monetize its AI cloud computing offerings. However, Microsoft's latest earnings report shifted the narrative, as 33% Azure growth during its fiscal third quarter ended up allaying investor concerns.
"We believe Microsoft will also hit the $4 trillion market cap club this summer and then over the next 18 months the focus will be on the $5 trillion club," said Wedbush as it believes that the AI-led stock market growth is still in its nascent stages. Going all-in on AI, the investment bank shares that "it represents the biggest tech transformation in over 40 years" and adds "that for every $1 spent on Nvidia, there is an $8-$10 multiplier across the rest of the tech ecosystem."
While Wedbush's note focuses primarily on enterprise AI, the bank briefly mentions that Alphabet, Amazon and Meta are its favorite players in consumer AI. Notably missing is Apple, whose 13% year-to-date share price drop is partly due to investor belief that the firm has fallen behind big tech when it comes to AI.
The bank concludes its note by sharing that it is seeing "many IT departments focused on foundational hyper scale deployments for AI around Microsoft, Amazon, and Google with a laser focused on the software driven use cases currently underway as high priority AI use cases have been identified and now being driven/accelerated across a myriad of verticals."
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