Nvidia has very recently broken the $4 trillion mark, and the $5 trillion mark is already being talked about. It has been the first stock to hit the $4 trillion mark, it might also happen that it crosses the $5 trillion mark while no other company is able to reach the $4 trillion mark. What is propelling this boom? What has gone in favor of Nvidia for stocks to see a rally never of a nature that has never been heard before. The $4 trillion mark has been an extraordinary accomplishment. What is even crazier is the pace at which it was achieved. The company jumped from $1 trillion to $4 trillion in just over a year.
The fairytale pace with clear headwinds in its favour has made some experts believe that Nvidia can hit a $5 trillion market cap this year. The biggest handicap was created in Jan 2025 by the release of DeepSeek. The compute and business model was under challenge. It led to a very temporary slowdown, and since then it has been a steep upward climb only. The tech behind this boom is at the core of it. Nvidia isn’t just leading the artificial intelligence infrastructure boom, its core product, the graphics processing units (GPUs) today are the backbone of AI data centres.
The company’s CUDA software has helped create a huge moat around its means, which means its growth trajectory mostly will not get hampered on technical and product related issues. CUDA (Compute Unified Device Architecture) enables software developers to use Nvidia GPUs for general purpose processing and not only for graphics rendering. Accordingly, the developers could program its chips for other purposes. CUDA became the platform that developers learned to program GPUs on. The network effect helped Nvidia extend its lead, and last quarter it captured a 92% market share in GPUs.
On the business / shares side Nvidia’s valuation is still reasonable. Nvidia’s P/E is lofty compared with historical stock norms but is consistent (or even conservative) against hyper-growth AI narrative. The PEG ratio signals that profit growth is more than adequate to support the price for now. The low PEG reflects the consensus of continued strong earnings momentum going forward. Given the growth patterns the credible expert speculation is that Nvidia could achieve $5 trillion this year itself but this depends on sustained high demand for AI chips and absence of major negative shocks.
NVIDIA HAS MADE LOFTY VALUATIONS TO LOOK GROUNDED, THE STREAK CONTINUES.
Sanjay Sahay
Good evening.