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Jun 19, 2024, 10:51am EDT
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Semafor Signals

Nvidia overtakes Microsoft to become world’s most valuable company

Insights from Bloomberg, The Motley Fool, and The Wall Street Journal

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Ann Wang/Reuters
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The News

Nvidia became the most valuable company in the world with a market cap of $3.33 trillion, overtaking Microsoft.

The US-based chip manufacturer has control over about 80% of the market for artificial intelligence chips.

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It’s Nvidia’s market; we’re all just trading in it,” a market strategist at a global brokerage firm said. Another analyst called Nvidia’s chips “the new gold or oil in the tech sector.”

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SIGNALS

Semafor Signals: Global insights on today's biggest stories.

Nvidia is a key driver of stock market peaks

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Sources:  
The Wall Street Journal, The Motley Fool, Business Insider

Nvidia’s record market cap helped power the S&P 500’s eighth consecutive record day and 31st of the year, and the Nasdaq and Dow Jones indexes also finished higher than the previous day, The Wall Street Journal noted. Nvidia’s stock has been a “table-pounding buy,” an analyst at The Motley Fool said, arguing that as the global leading manufacturer of AI hardware, Nvidia can offer a hedge against the uncertainty that comes with the unprecedented rise of the technology, making it an attractive investment option. Wall Street remains “bullish,” and one analyst expects a $10 trillion valuation for Nvidia by the end of 2030, Business Insider noted.

The company’s success comes in part from investment in Southeast Asia

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Source:  
Bloomberg

Like other tech giants including Apple, Microsoft, and Amazon, Nvidia owes part of its success to its global investments, particularly in Southeast Asian countries like Malaysia, Vietnam, and Singapore, Bloomberg reported. Southeast Asia is becoming increasingly attractive for tech investment because it’s considered more immune to geopolitical fallout from US-China tensions, and easier to navigate politically than India: Tech giants are expected to invest $60 billion in the region for data centers alone over the next few years. The “deep talent pool” and support of cross-border investments also make it a viable alternative to China, Bloomberg wrote.

Fears of a dot-com like bubble are unfounded, some analysts say

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Sources:  
The Wall Street Journal, Citywire

Investment companies like UBS and BlackRock have dismissed concerns that the AI market is going to see a dot-com like bubble, Citywire reported. “We don’t see an AI bubble, and the profitability of mega-cap tech companies stands in contrast to the unprofitable companies driving the dot-com bubble,” a BlackRock official said in a note Tuesday. One investor told The Wall Street Journal that the differences between the AI and dot-com boom are in the speed of change, the market size, and “the stage when the most valuable company was reached.”

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