Hats off! Nvidia becomes first company to hit $4T market cap

Nvidia hit a $4 trillion market cap on Wednesday, becoming the first company ever to reach this milestone. The chipmaker’s stock jumped more than 2% as investors continue betting on the company’s dominance in the generative AI hardware market, cementing its position as the world’s most valuable company ahead of Microsoft and Apple.

The big picture: Nvidia’s meteoric rise reflects the explosive demand for AI infrastructure since ChatGPT’s launch in late 2022, with the company establishing itself as the decisive leader in graphics processing units that power large language models.

• Graphics processing units (GPUs) are specialized computer chips originally designed for rendering video game graphics but now essential for training AI systems like ChatGPT.
• The company has positioned itself as the go-to supplier for the specialized hardware needed to build and run advanced AI models.

Key milestones: The California-based company, founded in 1993, has experienced unprecedented growth in recent years.

• Nvidia first passed the $2 trillion mark in February 2024 and surpassed $3 trillion in June.
• Shares have surged more than fifteenfold over the last five years.
• The stock is up more than 15% over the last month and 22% since the start of the year.

Why this matters: Nvidia’s valuation surge demonstrates how the AI boom has fundamentally reshaped tech valuations, with the company now worth more than Microsoft—one of its biggest and most important customers.

Geopolitical headwinds: The rally comes despite ongoing challenges from U.S.-China trade tensions that are significantly impacting Nvidia’s business.

• Recent export restrictions on Nvidia’s H20 chips created specifically for China will cost the company $8 billion in lost sales.
• “The $50 billion China market is effectively closed to U.S. industry,” CEO Jensen Huang said during a May earnings call.
• Huang previously told CNBC that getting blocked from selling chips in China would be a “tremendous loss” for the company.

What’s next: Nvidia’s ability to maintain its $4 trillion valuation will depend on continued AI adoption and how effectively the company navigates international trade restrictions while meeting surging global demand for AI hardware.