Market efficiency theory remains the backbone of growth in the world's economy. As the world continues to move towards a strong and efficient market, investors are increasingly investing in the best companies. Nvidia is one of such. Reports show the company is now worth $5 trillion beating Microsoft and Apple.
A small company with great ambition
Nvidia didn't start as an AI chip maker. But it continues to make waves in the technology field. Through its research and development powerhouse, it was able to pull the string. This enables it to become the world's largest firm for AI chips.
Ten years ago, that is in 2015, the company's share price was $0.47. Stock market investors have demanded to own a spoonful of the tech giant’s teacup. The company's innovations and collaborations announcements over time have resulted in an increase in Nvidia's valuation. This pushed Nvidia shares to a 44,000% increase in the space of 10 years. So, its current stock is worth 5 trillion dollars with a share price of $207.85.
The valuation is not just about share price growth. The company has been compared with the GDP of countries. Its great ambition positioned the company as the fourth largest economy. If we assume Nvidia as a nation, it is more valuable than Germany with a Gross Domestic Product of $4.6 trillion.
Microsoft and Apple (makers of iPhones and MacBooks) are currently valued at $4 trillion and $3.9 trillion respectively. Alphabet (Google's parent company) follows at $3.2 trillion. Next, Amazon and Meta with $2.4 and $1.8 trillion in stock market value. Therefore making Nvidia the world's most valuable company. This is a company whose market share price was $0.47 in February 2015, according to Forbes.
The Richest Man in Babylon
Although Nvidia is a five trillion dollar company, this has not resonated with its CEO's value, which currently stands at $174.4 billion. Huang is the world's eighth-richest man. This is due to the small fraction of shares he owns in the company. Reports show that Jensen Haung has ownership of 3% of the company's stock. The company might continue to increase its green candles in market valuation. If this is the case, in no time, he might be the next richest man in Babylon.
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Efficient market or another disaster?
This year has seen a more bullish trend in the stock market than analysts might have predicted. Companies' stock continues to rise. These have led to fears that there might be a repeat of the dot-com bubble. This occurred from 1995 to 2000.
Looking the other direction tells a different story. That is an efficient market hypothesis. Probably, the stock market bullish trend might be a result of market information. Maybe the world's largest stock exchanges and companies are closer to strong-form market efficiency.