The first $5 trillion company in history is Nvidia

Nvidia has reached the next major milestone less than four months after becoming the first £4 trillion company in history

Is Nvidia's enormous valuation warranted?

As the first company in history to reach a £5 trillion market capitalization, Nvidia has once again created stock market history.

In the first half hour of trading on October 29, shares of Nvidia (NASDAQ:NVDA) increased by nearly 5%, which was sufficient to raise its market capitalization above £5 trillion.

This most recent milestone was reached less than four months after Nvidia became the first £4 trillion company in history. Only Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) have matched this accomplishment thus far, highlighting the degree to which Nvidia is outpacing other businesses.

According to Dan Ives, head of global technology research at Wedbush Securities, "Nvidia's chips remain the new oil or gold in this world for the tech ecosystem."

The price of Nvidia's shares has increased by Y% so far this year and by percent in the 12 months ending on October 28.

The rise of low-compute Chinese AI startup DeepSeek, the unrest that followed Trump's tariffs, and the tense US-China trade relations that have threatened to limit Nvidia's exports to one of the biggest chip markets in the world have all been overcome by Nvidia during that run.

Additionally, there is growing skepticism regarding the artificial intelligence (AI) frenzy that is currently engulfing the stock markets, despite the fact that Nvidia appears to be able to consistently overcome the obstacles that the world presents. This will undoubtedly lead to inquiries about the rationality of Nvidia's valuation.

What caused the market value of Nvidia to surpass £5 trillion?

Nvidia's pivotal role in the artificial intelligence (AI) revolution has fueled its ascent to become the most valuable company in the world. Not only are these chips thought to be the best for training and enhancing AI models, but the majority of AI developers now specifically design their software to run on Nvidia architecture, making its graphics processing units (GPUs) the state-of-the-art.

Jensen Huang, the company's CEO, gave a keynote address at Nvidia GTC Live in Washington, DC, on October 28, which caused Nvidia's stock to soar above the £5 trillion mark.

Huang made a number of announcements, including a £1 billion investment in Nokia to develop 6G cellular technology to run on Nvidia chips and a partnership with data analytics firm Palantir (NASDAQ:PLTR), both of which may have independently raised its share price. In terms of Nvidia's fundamentals, however, the company's "visibility" of £500 billion in revenue through the end of next year may have been the most significant announcement of all.

Huang stated, "This is how much business is on the books," in reference to the backlog of orders for Nvidia's Blackwell chips and its upcoming Rubin chips, which are anticipated to go into production the following year. "So far, half a trillion dollars." A "

Analysts have responded favorably to these figures. According to Matt Bryson, managing director of equity research at Wedbush Securities, "even assuming the most conservative interpretation of Huang's commentary that all Data Center revenue across calendar years 2025 and 2026 would be over £500 billion would suggest our assumptions for Data Center sales over the next six quarters are roughly 20% too conservative."

Vivek Arya, a research analyst at Bank of America, increased his price target for Nvidia stock from £235 to £275, stating that "we believe Nvidia can maintain its strong mid-70s gross margin on the strength of its products, as it has strong co-design and volume support from multiple memory suppliers" and that consensus revenue estimates were possibly ten percent too low. A "

However, on the morning of October 29, President Donald Trump hinted that he would talk about Blackwell chips with Chinese President Xi Jinping when they meet for trade talks later this week. This was the catalyst that ultimately caused Nvidia to surpass £5 trillion.

Due in large part to US trade restrictions on strategically important technology, Nvidia is currently unable to export its most sophisticated chips to China (though Beijing is also restricting imports to protect its own domestic chipmaking industry). Regaining access to the Chinese chip market would be a major development for Nvidia, as Huang had previously estimated that the market could be worth £50 billion. However, Nvidia's projections do not currently include any sales to the country.

Is Nvidia a worthwhile investment?

The thought of any one company being worth £5 trillion will make many investors cringe. Because of the nature of the stock market, prices can only be justified or deemed excessively high in retrospect. Nvidia may or may not be worth this sum.

The investment case for Nvidia makes the assumption that the adoption of AI and the ensuing expenditure on Nvidia's chips will continue to pick up speed in the future.

However, a slowdown might cast doubt on this theory. Many are concerned that the stock market, which is currently oversaturated with mega-cap stocks that are focused on artificial intelligence, represents an AI bubble that may burst.

According to this analysis, Nvidia's £5 trillion valuation may be excessive.

Nevertheless, Nvidia has proven in recent years to be able to disprove critics. In the three years leading up to October 28, its shares increased by more than 1,300 percent (starting nearly exactly one month prior to ChatGPT's public launch). Many analysts have maintained that Nvidia's valuation was excessively high for the majority of that run.

Investing in Nvidia shares is ultimately a personal choice that should be determined by each person's unique situation. However, it is important to note that Nvidia currently makes up more than 8% of the SandP 500 and 5% of the MSCI All World index, which is a representation of the global stock market. As a result, you may already be significantly exposed to Nvidia through passive investments or your pension.