To The Moon

Notes: According to McKinsey, by 2030, 70% of companies will use AI, bringing $13 trillion in growth to the global economy. Sister Wood's Ark Investment Management is even more exaggerated, and the figure it gives is 200 trillion US dollars.

$NVIDIA Corp(NVDA)$ is knocking on the door of the trillion-dollar club in the US stock market.

For more than a century, the U.S. stock market has been home to the world's largest companies. As the engines of economic growth change, so too do the industries that give birth to the world's largest companies.

In 1901, $U.S. Steel(X)$ became the world's first $1 billion company.

Automobile manufacturing drove $General Motors(GM)$ to become the world's first $10 billion company in 1955.

Industrial conglomerate $General Electric Co(GE)$ became the world's first company with a market capitalization of more than $100 billion in 1995.

In 2018, technology giant $Apple(AAPL)$ became the world's first trillion-dollar market capitalization company.

Value creation requires technology

Since then, $Microsoft(MSFT)$ , $Amazon.com(AMZN)$ and $Alphabet(GOOG)$ $Alphabet(GOOGL)$ have also joined the trillion market value club of US stocks.

Now, the chip giant $NVIDIA Corp(NVDA)$ is also knocking on the door of this club. After the release of the first quarterly report for fiscal year 2024 (as of April 30), the stock price has soared 24%, and its market value has risen to US$940 billion. In the long run, it is only a matter of time before $NVIDIA Corp(NVDA)$ 's market value breaks through $1 trillion.

$NVIDIA Corp(NVDA)$ , the Pioneer of Artificial Intelligence

As early as 2016, Nvidia CEO Jensen Huang personally provided OpenAI with an AI-specific supercomputer. Since then, the company's chip has also become the training chip for the ChatGPT large language model.

Today, in order to allow millions of enterprise customers to use AI through the data center, from Microsoft to Google, every large cloud computing service provider is vying for Nvidia's GPU.

Jensen Huang said that during the first quarter, the existing $1 trillion data center infrastructure needs to transition to accelerated computing, so that new technologies such as generative AI can be applied.

Guess what? $NVIDIA Corp(NVDA)$ 's market share in this field is estimated to be as high as 90%, and the company is also accelerating the increase in the production capacity of the entire data center chip in order to meet the soaring demand.

However, $NVIDIA Corp(NVDA)$ 's dominance in the field of AI is not only reflected in the data center. The company's Drive platform provides hardware and software solutions for fully autonomous driving for automakers, with customers ranging from traditional brands like Mercedes-Benz to upstart electric vehicles like $NIO Inc.(NIO)$ . In the first quarter, $NVIDIA Corp(NVDA)$ 's automotive business revenue more than doubled to $296 million year-on-year, and its potential revenue pipeline increased to $14 billion from $11 billion in the previous year.

Q1 results beat Wall Street expectations

$NVIDIA Corp(NVDA)$ 's first-quarter revenue and non-GAAP earnings per share were $7.2 billion and $1.09, respectively, far exceeding Wall Street analysts' expectations of $6.5 billion and $0.92, of which data center quarterly revenue increased from $3.9 billion to a record $4.2 billion Dollar.

$NVIDIA Corp(NVDA)$ 's chief financial officer said the strong performance of its data center business was due to rising demand for chips related to generative AI and large language models.

But the real story to watch is the company's earnings forecast. $NVIDIA Corp(NVDA)$ expects second-quarter revenue of $11 billion, far exceeding Wall Street's forecast of $7.2 billion and marking the highest quarterly revenue in the company's history.

Nvidia stock is expensive, but the stock market is looking at the future

Nvidia stock isn't cheap by any traditional valuation metric: Based on the company's trailing 12-month non-GAAP EPS of $3.06, it trades at a price-to-earnings ratio of 124, which is 4 times more of the $NASDAQ 100(NDX)$’s average valuation at 28.

But looking at the future, especially the huge potential of artificial intelligence. According to McKinsey, by 2030, 70% of companies will use AI, bringing $13 trillion in growth to the global economy. Sister Wood's Ark Investment Management is even more exaggerated, and the figure it gives is 200 trillion US dollars.

For $NVIDIA Corp(NVDA)$ to join the trillion-dollar club of $Apple(AAPL)$ , $Microsoft(MSFT)$ , $Amazon.com(AMZN)$ , and $Alphabet(GOOG)$ , $NVIDIA Corp(NVDA)$ needs to continue to rise by more than 6%. That might not be the end of it yet, and this chip stock could even become the world's largest company.