Nvidia Hits $5 Trillion Valuation. What That Signals for the Market

Nvidia Corp. made history last week, becoming the first company in history to reach a $5 trillion market valuation a milestone that cements its dominance not just in technology but across the global economy. As the driving force behind the artificial intelligence (AI) boom, Nvidia isn’t merely the most valuable company on the planet it’s arguably the most influential stock in Wall Street’s history.

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Since early 2023, Nvidia has been the engine behind much of the market’s upward momentum, rewarding investors with extraordinary gains and adding billions to CEO Jensen Huang’s fortune. Its size now exceeds that of six out of the 11 sectors within the S&P 500 Index, as well as the total equity markets of numerous countries.

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“This is a truly historic anomaly something remarkable that will be remembered for decades,” remarked Matt Miskin, co-chief investment strategist at Manulife John Hancock Investments.

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Adding to its impressive momentum, Nvidia recently announced new partnerships with major global players, including Nokia Oyj, Samsung Electronics Co., and Hyundai Motor Group. While the company won’t release its next earnings report until mid-November, the latest results from other mega-cap tech firms suggest Nvidia’s growth potential remains vast.

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Big Tech titans such as Microsoft Corp., Amazon.com Inc., and Meta Platforms Inc. have all reiterated their commitment to massive AI-related investments. Collectively, the four companies are projected to increase capital expenditures by 34% to about $440 billion over the next 12 months, according to data. That level of spending has been a key driver behind Nvidia’s surging revenue outlook expected to reach $285 billion in its next fiscal year, up from just $11 billion in fiscal 2020.

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With these staggering figures, it’s no surprise that talk of an “AI bubble” continues to circulate, with Nvidia often at the center of those discussions. However, at the company’s annual GTC conference, Jensen Huang brushed aside fears of overheating, while Federal Reserve Chair Jerome Powell also dismissed comparisons to the dot-com bubble of the late 1990s.

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“Every major trend eventually reaches a peak before reversing,” said Miskin. “That will likely happen here at some point. But for now, companies leading the AI revolution are delivering the strongest earnings growth and until that changes, they’ll continue to drive market leadership. Still, it does seem like the S&P 500 has placed many of its bets on just one dominant theme.”

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As Nvidia’s valuation climbed past $5 trillion, its influence on equity indexes became even more pronounced. The company now represents roughly 8.5% of the S&P 500 more than the combined weight of the index’s bottom 240 members.

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According to Howard Silverblatt, senior index analyst at Standard & Poor’s, that’s likely a record for any single component. For comparison, Apple’s share peaked at 7.7% in mid-2023, and Microsoft’s reached 7.4% later that year. Today, the seven largest tech giants together account for more than 36% of the entire S&P 500, with Apple holding the second-largest weighting at 6.9%.

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Beyond its market share, Nvidia’s valuation now eclipses the total stock market capitalizations of countries such as the Netherlands, Spain, the UAE, and Italy. Based on data, the Santa Clara-based firm is now larger than all but five global stock markets those of the U.S., China, Japan, Hong Kong, and India.

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Investor sentiment remains overwhelmingly positive. Around 91% of Wall Street analysts rate Nvidia as a “buy” or equivalent. Many believe the rally still has room to run, with HSBC analyst Frank Lee recently lifting his price target to a Street-high of $230 implying a potential market capitalization near $8 trillion.

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Yet not everyone is convinced. Seaport Global Securities analyst Jay Goldberg remains one of the few dissenting voices, maintaining a “sell” rating since April and setting a Street-low price target of $100. Despite his caution, Nvidia’s stock has more than doubled since then.

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Normally, as a company grows, its sales expansion tends to moderate due to tougher year-over-year comparisons. Among S&P 500 firms generating $100 billion or more in annual revenue, average sales growth hovers around 6%. Nvidia, once again, breaks the mold its revenue is expected to rise nearly 60% in the current fiscal year. While that’s slower than the triple-digit growth of the past two years (126% and 114%), it still vastly outpaces its megacap peers. Microsoft and Apple, for instance, are projected to grow by 15% and 6.2%, respectively.

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The company’s meteoric rise has also propelled Jensen Huang’s personal wealth to staggering new heights. His net worth has soared to $176 billion, up more than $60 billion this year alone, according to the Billionaires Index. That makes him one of the world’s 10 richest individuals. Huang owns roughly 3.5% of Nvidia’s stock through personal holdings and family trusts according to a recent filing with the U.S. Securities and Exchange Commission.

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Nvidia’s $5 trillion milestone marks more than just a triumph of technology it’s a defining moment in the story of global markets. Its unprecedented dominance underscores both the promise and the potential risks of an economy increasingly powered by artificial intelligence.

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