Technology

Nvidia Joins the Trillion Dollar Club

Published

4 days ago

May 30, 2023

Dorothy Neufeld

Graphics/Design:

Bhabna Banerjee

Chart showing Nvidia surpassing the $1 trillion market cap milestone becoming the eighth company to join that club

Nvidia Joins the Trillion Dollar Club

Chipmaker Nvidia is now worth nearly as much as Amazon.

America’s largest semiconductor company has vaulted past the $1 trillion market capitalization mark, a milestone reached by just a handful of companies including Apple, Amazon, and Microsoft. While many of these are household names, Nvidia has only recently gained widespread attention amid the AI boom.

The above graphic compares Nvidia to the seven companies that have reached the trillion dollar club.

Riding the AI Wave

Nvidia’s market cap has more than doubled in 2023 to over $1 trillion.

The company designs semiconductor chips that are made of silicon slices that contain specific patterns. Just like you flip an electrical switch by turning on a light at home, these chips have billions of switches that process complex information simultaneously.

Today, they are integral to many AI functions—from OpenAI’s ChatGPT to image generation. Here’s how Nvidia stands up against companies that have achieved the trillion dollar milestone:

	Joined Club	Market Cap in trillions	Peak Market Cap in trillions
Apple	Aug 2018	$2.78	$2.94
Microsoft	Apr 2019	$2.47	$2.58
Aramco	Dec 2019	$2.06	$2.45
Alphabet	Jul 2020	$1.58	$1.98
Amazon	Apr 2020	$1.25	$1.88
Meta	Jun 2021	$0.68	$1.07
Tesla	Oct 2021	$0.63	$1.23
Nvidia	May 2023	$1.02	$1.02

Note: Market caps as of May 30th, 2023

After posting record sales, the company added $184 billion to its market value in one day. Only two other companies have exceeded this number: Amazon ($191 billion), and Apple ($191 billion).

As Nvidia’s market cap reaches new heights, many are wondering if its explosive growth will continue—or if the AI craze is merely temporary. There are cases to be made on both sides.

Bull Case Scenario

Big tech companies are racing to develop capabilities like OpenAI. These types of generative AI require vastly higher amounts of computing power, especially as they become more sophisticated.

Many tech giants, including Google and Microsoft use Nvidia chips to power their AI operations. Consider how Google plans to use generative AI in six products in the future. Each of these have over 2 billion users.

Nvidia has also launched new products days since its stratospheric rise, spanning from robotics to gaming. Leading the way is the A100, a powerful graphics processing unit (GPU) well-suited for machine learning. Additionally, it announced a new supercomputer platform that Google, Microsoft, and Meta are first in line for. Overall, 65,000 companies globally use the company’s chips for a wide range of functions.

Bear Case Scenario

While extreme investor optimism has launched Nvidia to record highs, how do some of its fundamental valuations stack up to other giants?

As the table below shows, its price to earnings (P/E) ratio is second-only to Amazon, at 214.4. This shows how much a shareholder pays compared to the earnings of a company. Here, the company’s share price is over 200 times its earnings on a per share basis.

	P/E Ratio	Net Profit Margin (Annual)
Apple	30.2	25.3%
Microsoft	36.1	36.7%
Aramco	13.5	26.4%
Alphabet	28.2	21.2%
Amazon	294.2	-0.5%
Meta	33.9	19.9%
Tesla	59.0	15.4%
Nvidia	214.4	16.19%

Consider how this looks for revenue of Nvidia compared to other big tech names:

$NVDA $963 billion market cap, 38x Revenue
$MSFT $2.5 trillion market cap, 12x Revenue$TSLA $612 billion market cap, 7.8x Revenue$AAPL $2.75 trillion market cap, 7.3x Revenue$GOOG $1.6 trillion market cap, 6.1x Revenue$META $672 billion market cap, 6x Revenue pic.twitter.com/VgkKAfiydx

— Martin Pelletier (@MPelletierCIO) May 29, 2023

For some, Nvidia’s valuation seems unrealistic even in spite of the prospects of AI. While Nvidia has $11 billion in projected revenue for the next quarter, it would still mean significantly higher multiples than its big tech peers. This suggests the company is overvalued at current prices.

Nvidia’s Growth: Will it Last?

This is not the first time Nvidia’s market cap has rocketed up.

During the crypto rally of 2021, its share price skyrocketed over 100% as demand for its GPUs increased. These specialist chips help mine cryptocurrency, and a jump in demand led to a shortage of chips at the time.

As cryptocurrencies lost their lustre, Nvidia’s share price sank over 46% the following year.

By comparison, AI advancements could have more transformative power. Big tech is rushing to partner with Nvidia, potentially reshaping everything from search to advertising.

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Visualizing the Top U.S. States for AI Jobs

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AI

Visualizing the Top U.S. States for AI Jobs

Nearly 800,000 AI jobs were posted in the U.S. throughout 2022. View this graphic to see a breakdown by state.

Published

1 week ago

May 26, 2023

Marcus Lu

Visualizing the Top U.S. States for AI Jobs

Much ink has been spilled over fears that artificial intelligence (AI) will eliminate jobs in the economy. While some of those fears may be well-founded, red-hot interest in AI innovation is creating new jobs as well.

This graphic visualizes data from Lightcast, a labor market analytics firm, which shows how many AI-related jobs were posted in each state throughout 2022.

In total there were 795,624 AI jobs posted throughout the year, of which 469,925 (59%) were in the top 10. The full tally is included in the table below.

Rank	State	Number of job postings	% of total
1	California	142,154	17.9%
2	Texas	66,624	8.4%
3	New York	43,899	5.5%
4	Massachusetts	34,603	4.3%
5	Virginia	34,221	4.3%
6	Florida	33,585	4.2%
7	Illinois	31,569	4.0%
8	Washington	31,284	3.9%
9	Georgia	26,620	3.3%
10	Michigan	25,366	3.2%
11	North Carolina	23,854	3.0%
12	New Jersey	23,447	2.9%
13	Colorado	20,421	2.6%
14	Pennsylvania	20,397	2.6%
15	Arizona	19,514	2.5%
16	Ohio	19,208	2.4%
17	Maryland	16,769	2.1%
18	Minnesota	11,808	1.5%
19	Tennessee	11,173	1.4%
20	Missouri	10,990	1.4%
21	Oregon	10,811	1.4%
22	Washington, D.C.	9,606	1.2%
23	Indiana	9,247	1.2%
24	Connecticut	8,960	1.1%
25	Wisconsin	8,879	1.1%
26	Alabama	7,866	1.0%
27	Kansas	7,683	1.0%
28	Arkansas	7,247	0.9%
29	Utah	6,885	0.9%
30	Nevada	6,813	0.9%
31	Idaho	6,109	0.8%
32	Oklahoma	5,719	0.7%
33	Iowa	5,670	0.7%
34	South Carolina	4,928	0.6%
35	Louisiana	4,806	0.6%
36	Kentucky	4,536	0.6%
37	Nebraska	4,032	0.5%
38	Delaware	3,503	0.4%
39	New Mexico	3,357	0.4%
40	Rhode Island	2,965	0.4%
41	New Hampshire	2,719	0.3%
42	Hawaii	2,550	0.3%
43	Mississippi	2,548	0.3%
44	Maine	2,227	0.3%
45	South Dakota	2,195	0.3%
46	Vermont	1,571	0.2%
47	North Dakota	1,227	0.2%
48	Alaska	970	0.1%
49	West Virginia	887	0.1%
50	Montana	833	0.1%
51	Wyoming	769	0.1%

The following chart adds some context to these numbers. It shows how the percentage of AI job postings in some of the top states has changed since 2010.

We can see that California quickly became the primary destination for AI jobs in the early 2010s, presumably as Silicon Valley companies began developing the technology.

California’s share has since declined, with a significant number of jobs seemingly moving to Texas. In fact, many tech companies are relocating to Texas to avoid California’s relatively higher taxes and cost of living.

The 10 Most In-Demand Specialized Skills

Lightcast also captured the top 10 specialized skills that were required for AI-related jobs. These are listed in the table below.

Skill	Frequency (number of postings)	Frequency (% of postings)
Python	296,662	37%
Computer Science	260,333	33%
SQL	185,807	23%
Data Analysis	159,801	20%
Data Science	157,855	20%
Amazon Web Services	155,615	19%
Agile Methodology	152,965	19%
Automation	138,791	17%
Java	133,856	17%
Software Engineering	133,286	17%