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Posted July 9, 2025 at 12:56 pm
The news broke this morning that Nvidia (NVDA) became the first company whose market capitalization crossed the $4 trillion mark. It is the latest milestone in a spectacular move for the stock that has been the key driver and beneficiary of the market’s embrace of all things involving artificial intelligence (AI). I don’t believe that it behooves investors to focus much on specific numbers, whether for market cap, price, or performance, but today’s achievement is a welcome opportunity to appreciate NVDA’s remarkable run.
In fortuitous timing, I happened to be making a media appearance just after the $4 trillion threshold was crossed. My comment at the time recognized the significance of the event while noting that there is an air of inevitability when a well-watched stock approaches a major valuation event. The necessary price became something of a magnet soon after its approach was widely reported.
It has long been said that if there is a gold rush, the best way to make money is to provide picks, shovels, and other supplies to the miners. If we think of AI as a modern-day gold rush, it is quite fair to say that NVDA is the premier manufacturer and supplier of mining equipment to the prospectors. We can debate whether ChatGPT, Grok, Perplexity, Gemini, or others might be the best AI model, but they all rely to some extent on NVDA chips. Much of the magnificence of the “Mag 7” comes from their embraces of AI. Under that paradigm, it is worth recognizing that NVDA receives significant cash flow from those other market winners.
We’ve noted before that the current bull market began in November 2022, and it is hardly a coincidence that ChatGPT was released that same month. To their credit, NVDA leaned into the theme of generative AI almost immediately. In February 2023 we wrote:
By my count, management mentioned “AI” 70 times. They mentioned it 37 times even before the first question was asked!
Since then, the stock has risen roughly 7X in the past 2.5 years, far outpacing the rather impressive 55% rise by the S&P 500 (SPX) over that period. Of course, there is a bit of a feedback effect. As NVDA steadily rose, thus increasing its market cap, its weight in SPX and the Nasdaq 100 (NDX) soared until it became the largest component in both measures (over 7% of SPX and over 9% of NDX). It is probably not an overstatement to say that as goes NVDA, so goes the market – especially since it tends to drag other key semiconductor stocks in its wake.
So, what now? That depends upon the resilience of both the rush to invest in AI and the market as a whole. To a large extent, those are heavily intertwined. At some point, investors will need to see tangible returns for all the money that is being spent by companies like Meta Platforms (META) to establish AI dominance. But until then, NVDA will remain more than happy to cash their checks and sell them chips. And investors will continue to enjoy the benefits.
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without reading your comments and facts page I’m pretty sure that what I believe is coming no one is talking about.I wondered about it for years. all I can say is , It Will Change The World forever
ALWAYS BEING A CONTRARIAN AND THAT USUALLY WORKING OUT FOR ME, I SEE THERE IS ABSOLUTELY NO MENTION HERE OF THE OTHER SIDE OF THE AI COIN. SUPPOSE, AS A PROMINENT TECH INVESTOR SAID ON CNBC YESTERDAY, THAT HE THOUGHT AI WAS A JOKE, A WASTE OF MONEY, ETC. I HAVE TO GO WITH THAT. AS HE SAID, JUST TRY CALLING FOR CUSTOMER SUPPORT AT A COMPANY AND SEE HOW AI JERKS YOU AROUND. SO IMAGINE WHAT IT DOES IN A MORE SOPHISTICATED REQUEST.SO FAR IT APPEARS THAT BILLIONS ARE BEING INVESTED TO GET A SPEED ENCYLOPEDIA.
NVDA actually bottomed in October of 2022 at $11 (split adjusted) so at $163 today it is almost a 15 bagger. Nvidia and Microsoft now have a combined market cap of $8,000,000,000,000–which would equate to $1000 for every man, woman and child on the planet. JUST THOSE TWO STOCKS. If you stacked ONE Trillion dollars in THOUSAND DOLLAR BILLS, it would reach an altitude of 65 miles. That is higher than where Jeff Bezos’ spaceship goes. The ignorance regarding valuations is simply amazing. This is the biggest tech bubble EVER.
What everyone is overlooking is that money (USD) isn’t a valuable as it used to be. Central banks have printed so much fiat currency that the purchasing power of the USD has almost halved since 2000, and that’s just using CPI to compute USD depreciation; nominal wage growth is a better measure of economic growth and this has risen 112% since 2000. In 2000 we all wanted to become millionaires, now its billionaires; a x 1000 growth in expectations. Meta writes $100m golden hello checks to recruit AI technicians and nobody flinches. If this were a game of Monopoly I would say the game is approaching and end. All the cash and assets have been hoovered up by a small group of players and the rest have no hope of catching up; except in real life you can’t end the game of life. My point, there isn’t going to be a burst bubble while there are still mega rich, high spending players left in the game battling to take each other out.
Wall St. loves a bubble. Like Prince said: “But life is just a party And parties weren’t meant to last…” of course, the average investors wants to keep the punchbowl full please, hang the cost, while blissfully ignoring the obvious, and appreciating the monthly account statements while they can. The potential of AI is in truly useful purposes like unfolding seemingly impossible protein folding possibilities, designer drugs, etc. But AI has to be monetized. The Internet first became monetized by selling online porn… what will it be for AI?