Thanks to a new record, Nvidia’s NVDA stock briefly surpassed $4 trillion in market capitalization. Let’s take a closer look at this world first.
Nvidia becomes the first company to reach $4 trillion in market capitalization
During Wednesday’s trading session, Nvidia set a new all-time high on the stock market, at $164.42 per share. After a recent low of $86.62 on April 8, this marks a rebound of nearly 90% in just three months:
As one record can hide another, this performance briefly allowed Nvidia to reach a particularly symbolic milestone: $4 trillion in market capitalization. Although the stock fell slightly at the end of trading, dropping back below this threshold, this is still a particularly remarkable achievement, as no other company had ever managed this feat before.
In concrete terms, Nvidia is now the world’s most valuable company, and the only asset with a higher valuation is gold, at $22,355 billion:
Is the stock market price too high?
This increase comes at a time when demand for chips has been growing steadily in recent years, given the strong growth of the artificial intelligence sector.
Of course, as with any high-growth market, a ceiling will be reached sooner or later and Nvidia’s sales could then decline, although technological advances in this area, which could prompt customers to invest again to upgrade, must also be taken into account.
To gauge the popularity of NVDA stock, Nvidia currently has a P/E ratio of 52.03. This is calculated by dividing the share price by the net earnings per share, which means that in Nvidia’s case, it would take 52 years of current annual earnings to buy back all outstanding shares.
This is therefore an indicator that suggests a certain degree of overvaluation, but it must also be put into context, as this statistic seems to be recurrent on the US market, given its global popularity. For example, Microsoft has a P/E ratio of 38.67, Apple 32.64 and Tesla 155.53.
