Nvidia becomes the first $4 trillion corporation in history

The AI boom has caused Nvidia's stock price to soar, making it the most valuable company in the world and the first to surpass the £4 trillion mark

Track all markets on TradingView On Wednesday, July 9, Nvidia's stock surged up to 21.8 percent, becoming the first company in history to surpass £4 trillion in market capitalization (market cap).

The share price of Nvidia (NASDAQ:NVDA) has continued its seemingly unstoppable rise despite facing numerous challenges this year. Since it was closely linked to the AI boom, Nvidia has been one of the most popular stocks among investors. As the company's stock continues to outperform, investors are getting paid for their confidence in the massive chipmaker.

Shares of Nvidia have increased 21.1% since the year began. The stock has risen 23.8 percent in the last 12 months.

Dan Ives, head of global technology research at Wedbush Securities, stated, "This is a historic moment for Nvidia, the tech space flexing its muscles." "The AI Revolution is reaching its next stage of growth led by the one chip fueling AI: Nvidia," he continued, referring to Nvidia's achievement of the £4 trillion milestone.

The introduction of ChatGPT in late 2022 marked the beginning of Nvidia's explosive rise to prominence. Since then, Nvidia's stock has grown in value by almost ten times, making it the most valuable company in the world while still being a sizable but little-known stock.

Formerly recognized for supplying power to video games, Nvidia has evolved into a key player in AI infrastructure, according to Matt Britzman, senior equity analyst at Hargreaves Lansdown.

How AI affects Nvidia's stock.

The cutting-edge computer chips used to construct the data centers where ChatGPT and other AI models are created and trained have been virtually exclusively owned by Nvidia.

Since ChatGPT gained widespread recognition, there has been a surge in investment in these centers. As the Magnificent Seven compete with one another for supremacy in AI, they are consistently increasing their capital expenditure (capex) projections.

In its most recent earnings report, Meta (NASDAQ:META) increased its capital expenditure forecast for 2025 to as much as £72 billion. It appears that Microsoft (NASDAQ:MSFT), the second-most valuable company in the world, will spend £80 billion. According to Wedbush, over the next three years, £2 trillion will be allocated to AI projects.

From its fiscal year that ended in January 2023, shortly after ChatGPTs launched, to its fiscal year that ended in January 2025, Nvidia's adjusted annual net income increased from £8.4 billion to £74.03 billion.

Its chips are "the only game in town the new gold and oil," Ives said.

Does Nvidia have room to grow?

Continuous earnings growth, which are based on Nvidia's near monopoly on cutting-edge AI chips, are the foundation of the company's share price increases.

Thus, there could be dangers to its expansion. Nvidia may have to lower its margins to preserve its market share if a major rival in the AI chip industry undermines its pricing power.

In a way, that is unavoidable. Even Ives, one of the most vocal supporters of Nvidia in the world, acknowledges that competitor Advanced Micro Devices (NASDAQ:AMD) will "join the party soon."

Britzman stated, "Growth is expected to slow and it is likely to lose some market share as competition and custom solutions ramp up." But he also emphasized that "Nvidia still looks appealing, even though it may seem odd for a company that just crossed the £4 trillion mark."

For a major tech company, Nvidia's stock is reasonably priced at about 32 times earnings. Although revenue growth may be slowing, there is still potential for future growth, as it is predicted to increase by about 50% this year.

Nvidia might be concerned about a slowdown in AI spending, but as of this writing, there is no sign that this will occur anytime soon.

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