This chip stock just won a big Google contract and is carving out its niche in AI
CNBCMay 25
Nvidia Passes Microsoft as Most Valuable Public Company
Image copyright: Justin Sullivan/Staff/Getty Images News via Getty Images
The Facts
Chip-maker Nvidia on Tuesday passed Microsoft to become the world's most valuable public company, based on data from S&P Global — an ascent fueled by a boom in generative artificial intelligence (AI) and greater demand for the company's chips.
The California-based company's value has nearly doubled since the start of the year, with it now worth $3.34T.
The Spin
Narrative A
Nvidia's large bet on AI has paid off. Sure, the company benefited from some luck — and it will face stiff competition moving forward — but it took foresight to expand from a video game-focused company to working with other industries, including car manufacturers, to eventually becoming the chip maker everyone in AI is turning to during this boom. Nvidia's high perch has been well-earned.
Narrative B
Nvidia seems to be doing everything right while being in the right spot at the right time. But in addition to an increase in competition that's right around the corner, Nvidia's popularity among investors has all the makings of a classic inflating bubble. Eventually, every bubble bursts, and in this case, investors and an entire industry could take a hit. We should slow down before identifying Nvidia as the most important company on the planet.