Benzinga - by Shanthi Rexaline, Benzinga Editor.
AI powerhouse Nvidia Corp.’s (NASDAQ:NVDA) shares had a solid run on Thursday despite the broader market weakness, with the buoyancy coming on the back of solid quarterly performance, strong forward guidance, positive management commentary on the call and the analysts’ doubling up on their bullishness. The value that the company added, thanks to the stellar run in the stock, left none other than Tesla CEO Elon Musk impressed.
What Happened: Nvidia ended Thursday’s session up 9.32% at $1,037.99, according to Benzinga Pro data, giving the company a market cap of $2.55 trillion. The AI chipmaker cemented further its place as the third most-valued global corporation, with only Microsoft and Apple above it.
Source: Y Charts
The mind-boggling value Nvidia has been adding over the past year has left Stanford professor Erik Brynjolfsson awestruck. Sharing a stock chart showing stock gains over the past five years, the economist said, “Nvidia now worth over $2.5 Trillion, more than the market cap of the entire German stock market.”
Musk reacted to the post with a “wow” expression.
WowBrynjolfsson was quick to point out that Musk-led Tesla’s market capitalization topped the value of Mexico’s stock market.— Elon Musk (@elonmusk) May 23, 2024
Germany’s Ailing: Vailshare Capital Management founder Jeff Ross joined in the Nvidia vs. German stock market comparison and said it says more about Germany's descent than anything about Nvidia’s assent.
The German economy is going through a rut. A report filed by IMF economists in late March delved into the predicament, as the country was the only G7 member nation to go into a recession in 2023. It is set to expand at the weakest pace among these countries this year.
Revised first-quarter GDP released by the German Federal Statistical Office on Friday confirmed the preliminary estimate of an annualized 0.2% quarter-over-quarter growth in real terms. In comparison, the U.S. economy grew by 1.6% for the first three months of the year. The weakness, according to the IMF economists, is due to a combination of temporary factors such as higher interest rates that weighed down on construction and other interest-rate sensitive sectors, slowing consumer spending, and some structural ones.
Germany’s manufacturing-intensive industry took a hit from the post-pandemic global rebalancing of demand away from manufactured goods and toward services, the economists said. Europe’s energy crisis in the wake of the Russia-Ukraine also served as a headwind.
The stock market is a proxy of a country’s economy and Germany’s economic weakness is reflected in the stock market’s valuation, which was valued at 1.973 trillion euro ($2.13 trillion) in 2023.
Incidentally, Nvidia’s market cap is only lower than seven of the world nations, namely the U.S., China, Germany, Japan, India, the U.K. and France.
Bloomberg journalist Jon Erlichman shared statistics in the thread, which also wowed Musk. He noted that personal digital assistant manufacturer Palm, Inc. was valued more than Apple, Nvidia and Amazon combined, in 2000.
Wow— Elon Musk (@elonmusk) May 24, 2024
Palm rode on the dot-com bubble and IPOed in March. After rising to a pre-IPO high of over $95, Palm’s shares came crashing down in a year as it could not survive the competition post the dotcom bubble burst. It was ultimately folded up into the then Hewlett-Packard in 2010.
Why It’s Important: Nvidia has been quick to adapt to the changing tech environment, moving away from being a mere manufacturer of gaming GPUs to being the frontrunner of the AI revolution. Its highly powerful AI accelerators are now a sine-qua-non in all AI applications, training and inference. The Jensen Huang-led company enjoys a near-monopoly position in the market for AI chips.
Analysts have been impressed with its dynamism and execution. Tech venture capitalist Gene Munster believes that Nvidia will grow faster for longer.
Huang and Musk share a cordial relationship. The Nvidia CEO recently said on the company’s earnings call and in interviews thereafter that “Tesla is far ahead in self-driving cars but every single car someday will have to have autonomous capability.” Musk acknowledged the appreciation and said, “Thanks Jensen.”
In premarket trading on Friday, Nvidia rose 0.39% to $1,042.
Read Next: Elon Musk Agrees Tesla Not Merely Automaker: ‘Like Valuing Nvidia Based On..Gaming GPU Segment’
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