Nvidia’s stock price has been on a tear lately, leaving many investors wondering if it’s just a hot streak or a sign of something bigger. The technology giant, known for its powerful graphics processing units (GPUs), has seen its share price surge by 757 per cent in the last one and a half years. Though it corrected a bit last week, for a brief period of time the chip-maker became the world’s most valuable company after its share price climbed to an all-time high on June 19. It was worth USD 3.34 trillion.
To give a context, the GDP of our country at the end of FY24 was around USD 3.7 trillion. The share price of Nvidia has nearly doubled since the start of this year. This surge coincides with a growing global interest in artificial intelligence (AI), with Nvidia’s GPUs playing a crucial role in powering the development and deployment of these advanced technologies. In recent years, it has benefited from a boom in demand for chips that train and run generative AI models, the most well-known of which being OpenAI’s ChatGPT.
This is not the first time that we are seeing a trend that is dominating the stock market. Remember the dotcom boom of the late 1990s? Companies like Amazon and eBay, then young and disruptive, rode the internet revolution to unimaginable heights. Even in India, we saw a massive increase in the share price of Infosys. Between the start of 1998 and March 2000, before the dotcom busted, the share price of Infosys rose by almost 3,200 per cent or 330 per cent every year.
Again, we saw a trend between 2004 and 2007 when many infrastructure and realty companies saw a vertical rise in their share price. For example, Unitech Group saw its share price increasing by 614 times between January 2004 and December 2007. More recently, the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) dominated the technology landscape, symbolising the dominance of social media and digital innovation.
This story is from the July 15, 2024 edition of Dalal Street Investment Journal.
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This story is from the July 15, 2024 edition of Dalal Street Investment Journal.
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