On Tuesday, when Goldman Sachs called Nvidia “the most important stock on planet earth,” the subtext of that assertion was that there is a bigger, more important company with no stock widely available to buy — OpenAI. Nvidia is a computer-chip maker. For most of its existence, it’s been a company that was loved by techies and gamers for making processors that made big, highly detailed games run smoothly, but it wasn’t the kind of tech household name that Apple or Microsoft had become.
In the last few years, all that has changed. It turns out that Nvidia’s graphic processors are especially good for harnessing the massive amount of power needed for artificial-intelligence programs. They’re so good, in fact, that the market value of the company has shot up as much as 600 percent since the end of 2022, putting it roughly on par with Amazon or all the Chinese companies listed on the Hong Kong stock exchange combined. Nvidia is, of course, selling lots of chips and commanding the kinds of high prices that make it one of the most valuable companies in the world. But as far as Wall Street is concerned, it is a proxy for the AI industry, which is attracting trillions of dollars in capital but has yet to produce a leading company that could be a part of the Dow Jones.
On Wednesday, Nvidia showed that it was only going to get bigger. The company made $22.1 billion during the last three months of the year — more than triple what it made during the same quarter last year, and easily beating the expectations from Wall Street. The reason was unambiguously because of AI. “Accelerated computing and generative AI have hit the tipping point,” Jensen Huang, founder and CEO of Nvidia, said in a press release. In the minutes directly after it reported its earnings, Nvidia’s shares shot up nearly 7 percent, nearly at the all-time high it had reached just a few days before.
So what does this all mean? Zoom out a bit, and the change to Wall Street’s priorities are evident — it is going all in on AI, wherever investors can find it. OpenAI itself is worth about $80 billion in the private markets, which is a lot of money, but wouldn’t even crack the top 100 companies of the S&P 500 Index. While OpenAI’s technology has been driving the popular conversation around artificial intelligence, the company’s corporate structure is likely the reason why it isn’t any higher. For evidence, take a look at the other big companies that are riding the AI wave, and it’s clear that the technology that Altman & Co. have spearheaded is worth multiples over that — at least, when it’s being used by for-profit, publicly traded companies.
Microsoft, which owns just under half of OpenAI’s corporate shares, has seen its market value rise by as much as 75 percent, to $3 trillion, since it announced it was deepening its involvement with the company. Meta, the parent company of Facebook, has seen its shares surge more than five-fold, past the $1 trillion mark, since it started using AI to sell ads. (Mark Zuckerberg has said that he won’t stop there and has designs on artificial general intelligence, the kind of sci-fi breakthrough that would give computers the humanlike ability to think and reason, at least in theory). What connects all these companies is the chips. “Nvidia provides, at its core, the technology to advance generative AI that is required by the mega-tech leaders driving AI innovation,” Quincy Krosby, chief global strategist for LPL Financial, said in an investor note.
As of Wednesday, Nvidia is among the top ten most valuable companies on the planet, and the change that augurs for Wall Street can hardly be overstated. Investors like AI because, like a lot of technology, it transforms labor into a thing that can be sold at a profit (at least by a small subset of companies) from a cost that has to be paid for, and this has the potential to radically reorder the priorities of thousands of companies. Apple, which had largely been the most valuable company in the world since 2011, has fallen behind Microsoft pretty solidly since last month because of AI. Nvidia is worth about half as much as Microsoft at this point, but it’s been hardly more than a year since OpenAI first released ChatGPT — meaning this technology is, ostensibly, still in its infancy. Calling Nvidia “the most important stock on planet earth” is, of course, outrageous hyperbole. But if AI is as important as Wall Street thinks it is, it might not be wrong.
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‘The Most Important Stock on Planet Earth’ Just Got Even Bigger
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22.02.2024
On Tuesday, when Goldman Sachs called Nvidia “the most important stock on planet earth,” the subtext of that assertion was that there is a bigger, more important company with no stock widely available to buy — OpenAI. Nvidia is a computer-chip maker. For most of its existence, it’s been a company that was loved by techies and gamers for making processors that made big, highly detailed games run smoothly, but it wasn’t the kind of tech household name that Apple or Microsoft had become.
In the last few years, all that has changed. It turns out that Nvidia’s graphic processors are especially good for harnessing the massive amount of power needed for artificial-intelligence programs. They’re so good, in fact, that the market value of the company has shot up as much as 600 percent since the end of 2022, putting it roughly on par with Amazon or all the Chinese companies listed on the Hong Kong stock exchange combined. Nvidia is, of course, selling lots of chips and commanding the kinds of high prices that make it one of the most valuable companies in the world. But as far as Wall Street is concerned, it is a proxy for the AI industry,........
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