The stock market's top story this past week — aside from the will-they, won't-they debt ceiling drama — was a gargantuan earnings report from chipmaker Nvidia.
The big picture: Huge numbers from its AI-centric data center unit catapulted its shares, which have trounced both the overall market and the largest names in corporate America over most of the last decade.
Why it matters: Nvidia's remarkable rise may represent the emergence of new American corporate giant.
- With a market value now more than $950 billion, it may soon join the trillion-dollar-market-cap club — the current members are just Apple, Microsoft and Amazon.
State of play: Over the last 10 years, Nvidia's shares have risen more than 10,000%, the best performance of any company in the S&P 500 over that period.
- That rise has created more than $940 billion in stock market wealth.
Reality check: That sounds incredible. And it is. But it's worth noting that it's possible that we're simply catching the company's performance at some sort of sugar-rush peak.
- For example, Tesla — at its peak in November 2021 — was up 19,000% over the previous decade. (About 10,000 percentage points of that gain have subsequently disappeared, as the shine rubbed off the shares.)
The big picture: Nvidia and some other semiconductor firms appear to occupy a remarkably lucrative spot in the American technology ecosystem.
- Their silicon serves as the picks and shovels of every high-tech gold rush that comes along, whether it's cloud computing, crypto or the AI hype that seems to be proliferating by the hour.
- In other words, Nvidia benefits from the lofty investor expectations about the future, while simultaneously seeing growth in profits and sales today.
The bottom line: As Nvidia shareholders can tell you, that's a very good place to be.
