Bigger than Japan’s GDP: The staggering rise of the world’s most valuable company

Nvidia became the first public company to reach a market capitalisation of $US5 trillion ($7.6 trillion) on Wednesday as the value of the US chipmaker grew to dwarf GDPs of advanced economies such as India, the United Kingdom and Japan.

The ravenous appetite for the Silicon Valley company’s chips is the main reason that its share price has increased so rapidly since early 2023, having first reached a company value of $US1 trillion in June of that year. It reached $US4 trillion only four months ago.

Here’s what you need to know about Nvidia’s journey to be one of the world’s most prominent companies, its leather jacket-wearing chief executive and the eye-watering numbers that illustrate the firm’s meteoric rise.

What is Nvidia and what does it do?

Founded in California in 1993, Nvidia is a manufacturer of chipsets known as graphics processing units, or GPUs. It was initially focused on making GPUs for computers and video games, but in recent years, it has become renowned for making the most advanced chips for use in artificial intelligence systems.

Demand skyrocketed off the back of the rise of AI, as more people began using chatbots and tech companies have scrambled for more chips to build and run their models.

Why is Nvidia’s valuation so high?

The AI boom has been the main driver of Nvidia’s surge to its record valuation this week.

Its technology is so advanced that successive US administrations have placed export controls on it on national security grounds to restrict China from importing the most technologically capable chips.

However, Nvidia’s shares climbed on Wednesday after US President Donald Trump said he expected to speak with Chinese President Xi Jinping about the company’s Blackwell chip. Trump said months ago he’d consider allowing Nvidia to export to China a downgraded version of the processor, and the hope is that such a deal might be on the table.

Such an arrangement is not unprecedented. In recent years, Nvidia has skirted export restrictions by sending downgraded versions of its chips to the Chinese market, with the hamstrung technology falling short of the cutting-edge requirements that US administrations had specifically banned out of security concerns.

What is Nvidia’s share price?

Nvidia’s shares were trading at $US207.04 ($314.37) on Thursday morning (AEDT). As of the opening of trading on Wednesday in the US, its total market capitalisation was $US5.054 trillion.

In addition to the long-term AI boom and hopes of a deal with Beijing, Nvidia this week disclosed $US500 billion in chip orders. In the past two months, it has also announced a $US100 billion investment in OpenAI, a partnership with Uber on robotaxis and a $US1 billion investment in Nokia to work together on 6G technology.

How much is $US5 trillion?

Compared to the value of other companies, Nvidia’s growth is stark.

It’s more than 33 times larger than Australia’s largest public company that isn’t a bank, mining giant BHP, which has a comparatively modest market capitalisation of $226 billion. It’s about 26 times bigger than the Commonwealth Bank, the biggest company in our market.

Indeed, it’s roughly twice the size of Australia’s entire sharemarket. The All Ordinaries, which tracks the value of the 500 largest companies in the market and makes up close to 90 per cent of the ASX, is worth about $3.4 trillion.

To put it into perspective, Nvidia’s value is more closely compared to output of some of the world’s major economies.

It is larger than the gross domestic product of Japan, the world’s fourth-largest economy ($US4.28 trillion), according to the International Monetary Fund. It is the same as Germany’s entire economic output.

Which other companies have been valued at more than $US1 trillion?

Only a handful of publicly traded companies have reached a valuation of more than $US1 trillion, and they’ve mostly been tech firms.

As of the close of trading on Tuesday, Microsoft, at $US4.04 trillion, and Apple, at $US3.99 trillion, were next among the most valuable companies in the S&P 500. Alphabet (the owner of Google), Amazon, and Meta (the owner of Facebook and Instagram) have also reached the milestone.

Who is Nvidia’s CEO?

Founder Jensen Huang is known for his black leather jackets and a tattoo that resembles the Nvidia logo.

He has previously spoken of the philosophy that he used to propel the company to its current position. “Run, don’t walk,” he told university students in Taiwan in 2023. “Either you are running for food, or you are running from becoming food.”

Huang’s net worth is $US178.9 billion according to Forbes, putting him eighth on its Real-Time Billionaires List. Elon Musk is No.1 at $US499.4 billion.

Through his leadership of Nvidia, he has met with Trump and repeatedly urged for the loosening of export restrictions to China, a development which now appears to have propelled the company to its greatest height.

With AP, Bloomberg

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