Nvidia has overtaken Apple in market value

Nvidia is already the second largest company in the world by market value. The microprocessor maker closed yesterday on Wall Street at $3.011 trillion (2.769 billion euros) versus $3.003 billion for Apple (2.762 billion euros). With this figure, the “three billion club”, which includes Microsoft ($3.151 billion), Nvidia and Apple, now reaches 20% of the total value of the S&P500 index, which includes the largest listed companies in the United States.

The primacy of Microsoft and Nvidia, which grew by no less than 212.58% over the year, is a reflection importance of artificial intelligence (AI). The first of these companies benefits from control of industry leading company OpenAI, creator of the famous chatbot‘ ChatGPT and its second virtual monopoly on the production of chips for this new technology.

Nvidia is even starting stepping on Microsoft’s toes. To the company co-founded by Bill Gates. This is a figure that in Europe would be insurmountable, as evidenced by the fact that on the Spanish stock market there is only one company, Inditex, whose value exceeds the distance between both companies. But, For the big tech companies in Silicon Valley, this is nothing. Yesterday, Nvidia practically added exactly that amount to its value. The big difference is that the artificial intelligence (AI) chip maker is much more expensive, with a PER of 71.52, almost double that of Microsoft.

But the wind appears to be blowing in favor of the company co-founded and led by Jensen Huang: On Friday, Nvidia will host split his actions. Each title, which yesterday cost $1,211 (1,114 euros), will become the tenth. With this operation, the company could experience another boost to the upside. Jaegong Jared Woodward According to Bank of America, when a large company does a stock split, its price increases by an average of 25% over the next twelve months.

INCREASE BY 50%

However, since NVIDIA announced its splitat the end of March, its shares rose in price by almost 50%. In other words, in these two and a half months they shot twice as much as Woodward estimated they should have done in twelve. This means that during this period the company’s value increased by almost a billion dollars, that is, cabout 920,000 million euros, which roughly corresponds to the entire production of goods and services in Spain in seven months.

Although, as with every rule, Woodward’s also has its exception: the average increase is 25%, as 30% of the companies that split their shares saw their prices fall within a year of the decision.

In theory, a stock split is beneficial to a company’s price by making it more attractive to retail investors, since spending €1,114 on a title is not the same as spending €114. In Nvidia’s case, there is another factor, a more psychological one. : A stock split could open the door to entry into the Dow. The most popular index of the 30 largest US companies.

In fact, this will only be a major milestone for the company’s prestige, which in turn will lead to increased buying interest from small shareholders. But nothing more, since the Dow Jones index has no meaning for the market. The reason is that an index is created by simply adding the price of a stock and dividing the result by a divisor.

Thus, capitalizing the company is useless. The system was developed in 1896 and had the advantage that it could be assessed using paper and pencil. This means, for example, that Microsoft’s influence on the Dow Jones Industrial Average is twice that of Apple. since the share price of the former is twice as high as that of the latter, despite the fact that both companies are worth almost the same.

In any case, the rise in Nvidia stock in recent weeks does not appear to be due to anyone following the old adage of “buy the rumors (in this case, the chance of a rise in value after a stock split) and sell the news.” . Rather, operators buy on rumors and news.

The rumor stems from Nvidia’s plans, announced Sunday by its CEO, to release new chips in 2025 and 2026. Considering that Huang is the complete opposite of, for example, Elon Musk, his predictions regarding new products have enormous credibility. And added to this is a number of concrete news indicating that the demand for Ndivida microprocessors remains unsurpassed.

Own Musk admitted that took chips from this company which were owned by electric car maker Tesla to supply its artificial intelligence company xIA and social network X – the old Twitter. It is logical that Tesla shareholders did not like this very much.But for those who work at Nvidia, this is music heaven. because it indicates that demand for the company’s microprocessors continues to outstrip supply. Another Silicon Valley giant Hewlett Packard, This weekend it also announced its dependence on Nvidia chips.