Daniel Howley and colleagues report in Yahoo Finance:
Nvidia (NVDA) on Wednesday became the first company in history to top a $5 trillion market valuation at the start of the trading day and hold on to it through the close. Nvidia's rise comes after a 5% jump in the stock on Tuesday on optimism about the prospect of renewed sales to China. As the world’s leading AI chipmaker, Nvidia stands as one of the biggest winners of the AI revolution. Nvidia has developed an ecosystem of software and computing tools around its GPUs. Since 2022 ChatGPT emerged, the need for computing hardware powerful and efficient enough to support AI applications has skyrocketed, including GPUs, tensor processing units, routers, switches, and storage. Though Nvidia is best known for its GPUs used for data centers, AI and machine learning, it's used across gaming, healthcare, financial services, automotive and others
Nvidia (NVDA) on Wednesday became the first company in history to top a $5 trillion market valuation at the start of the trading day and hold on to it through the close.
The company reached the milestone after comments from President Trump on Wednesday ahead of a planned meeting with CEO Jensen Huang added to optimism around prospects for Nvidia's sales in China.
Trump told reporters Wednesday that he and Huang would be "speaking about Blackwells," Bloomberg reported, referring to the company's AI chips, a version of which could win approval for export to China.
In its most recent quarterly report on Aug. 27, Nvidia said it realized no sales of its earlier-generation H20 chips into China. In July, the White House said it had struck a deal with Nvidia to allow H20 chip exports to China in exchange for a 15% cut of revenue. Nvidia said the arrangement had not yet been formalized.
Nvidia's rise on Wednesday also comes after a 5% jump in the stock on Tuesday, which was catalyzed by a slew of announcements from the company at its GTC event in Washington, D.C.
Among other announcements, Nvidia revealed Tuesday it is working with the US Department of Energy to build seven new supercomputers, including one that will use 10,000 Blackwell GPUs.
Other announcements include a deal to work with Uber (UBER) to build a fleet of self-driving cars and an agreement to sell 1,000 GPUs to drugmaker Eli Lilly (LLY). Nvidia also said it is working with Nokia (NOK) to help develop next-generation 6G cellular technology.
Nvidia also announced tie-ups with Palantir (PLTR) and Oracle (ORCL), as well as partnerships on a wireless 6G buildout with telecom companies including Cisco (CSCO) and T-Mobile (TMUS). The company also highlighted how its AI tech is powering robotics initiatives from companies ranging from Amazon (AMZN) to Foxconn, Caterpillar (CAT), and Belden (BDC), among others.
As the world’s leading AI chipmaker, Nvidia (NVDA) stands as one of the biggest winners of the artificial intelligence revolution. In 2024, the company gained $2 trillion in market value, as enterprises around the globe demand more data center capacity to support their growing need for high-performance computing. The stampede has only intensified in 2025.
But even rainmakers have vulnerabilities. Earlier this year, Nvidia lost nearly $600 billion in market value in one day — the largest single-day drop for a U.S. company — after a Chinese startup unveiled its DeepSeek AI model, which it claims requires far fewer chips than past models. The news sparked panic among investors, who worried demand for Nvidia’s chips would tank.
And as part of President Trump’s broad-reaching tariff regime, the company agreed to pay 15% of its revenues from Chinese AI chip sales to the U.S. government.
Still, Nvidia's gravity-defying growth keeps investors coming for more. The company’s revenue model is a good place to start to understand how the chipmaker gained its dominant position.
Nvidia GPUs: the flagship product
Nvidia designs and sells graphics processing units or GPUs. The company's history in this space dates to the late 1990s, when Nvidia invented the GPU for use in gaming applications. The architecture was innovative because it allowed small computations to run simultaneously rather than sequentially. The technology ushered in a new era of more realistic video game graphics.
Nvidia has since developed an ecosystem of software and computing tools around its GPUs. Developers use those tools to design and run complex, resource-intensive applications on Nvidia's hardware.
Nvidia AI: The new opportunity
Today, those applications go well beyond gaming. The company's most significant opportunity is in the field of AI, which has been a focus for Nvidia since 2013 when CEO Jensen Huang realized that high-performance GPUs could play an instrumental role in the growing adoption of machine learning technology.
That revelation began paying off when the 2022 launch of ChatGPT took AI computing mainstream. The sudden, sweeping popularity of the AI chatbot motivated enterprises globally to launch new AI tools and related services.
The need for computing hardware that is powerful and efficient enough to support AI applications has skyrocketed. That hardware includes GPUs, tensor processing units, routers, switches, and storage solutions, among other things. These, along with software that enables AI development, are collectively called AI infrastructure. Enterprises house this infrastructure in technology facilities called data centers.
Data center infrastructure has been the primary growth source for Nvidia, but the company also serves other industries. Gaming is still a core segment, though its contribution is relatively small. The company is working to marry its expertise in AI and graphics, which could create revenue synergies. In 2024, for example, Nvidia launched “Nvidia Ace,” a suite of tools for developing interactive avatars, called "digital humans."
Nvidia hardware is also used in the automotive and robotics industries, including autonomous driving applications. Ayako Yoshioka, portfolio consulting director at independent asset manager Wealth Enhancement Group, believes autonomous driving is Nvidia's next big opportunity — although it may not come quickly. "They will be tied up in AI for some time," Yoshioka said.
Telecommunications is another segment to watch. Nvidia hardware is already used in 5G data centers. The company envisions advancing telecommunications services to support the growing needs of the AI computing revolution. Connectivity demand for robotics, driverless vehicles, smart factories, and more will increase as AI technology matures. Nvidia has also launched a research platform to support the development of 6G wireless technology.
Nvidia's customer list includes some of the world's largest companies: Alphabet (GOOG), Amazon (AMZN), Meta Platforms (META), Microsoft (MSFT), and Tesla (TSLA).
Nvidia’s competitive advantages
Nvidia has some noteworthy advantages that insulate it from competition. These include forward-thinking leadership, a proven ability to innovate, and a robust and proprietary platform around its hardware.
Forward-thinking leadership. Twice in Nvidia's history, Huang has identified broad market opportunities where his company could innovate and excel.
Ability to innovate. Nvidia has the expertise and resources to create new solutions to fill unmet demands. This partly relates to the company's focus on design rather than manufacturing. Nvidia is a fabless company, which means it outsources production to other companies like Taiwan Semiconductor (TSM). In early 2025, Nvidia released its new Blackwell GeForce RTX 50 Series of GPUs, which it says will transform AI computer graphics, offering faster performance and greater energy efficiency at just a fraction of the cost of the GeForce RTX 4090.
Platform strategy. Hardware sales drive revenue, but Nvidia also provides a full suite of tools and resources developers can use to build and run applications. "This tight integration of hardware, software, and developer tools creates a moat around Nvidia's offerings that is difficult for competitors to match," Tower Hills Capital founder and CIO Drayton D'Silva said.
Broad ecosystem. Though Nvidia is best known for its GPUs that are primarily used for data centers, AI and machine learning applications, and gaming, its technology is used across a huge range of industries, including healthcare research and personalized medicine, financial services, the automotive sector, and more.
Nvidia risks to watch
Despite its strong market position and formidable advantages, Nvidia and its investors face significant risks. These include rising competition, high investor expectations, and the changing demands of a fast-paced industry.
Rising competition. Nvidia's dominant position in AI-capable chips has a downside. Nvidia competitors want their share of this growing market, and clients want more options. "There are a lot of companies, including Nvidia's own clients, that are working on custom chip design. Those clients don't want to be locked into a single chip supplier,” Yoshioka said. Several major Big Tech companies, including Amazon, Meta, and Google, are racing to develop their own AI chips to make them less dependent on outside suppliers like Nvidia. The introduction of newer AI models, like DeepSeek, could also lower demand for Nvidia chips.
Investor expectations. Investor optimism pushes the price of NVDA stock higher. If the company fails to satisfy expectations, a price correction will follow. Yoshioka recommends investors proceed with caution when expectations are high. Volatility can result when "too many investors look at Nvidia's growth and expect it to continue.”
Fast-paced industry. In 2023, Nvidia announced it would expedite its product roadmap by launching upgrades annually. The company previously followed a two-year refresh cycle. The change puts pressure on Nvidia to execute product launches flawlessly. Any delays or product failures could allow other providers like Advanced Micro Devices (AMD) to gain traction. AMD also upgrades its chips annually.
Export restrictions. Nvidia faces significant export controls on its AI chips, with especially tight restrictions on shipments to China. If the Trump administration imposes additional tariffs amid the growing U.S.-China trade war, Nvidia could face additional pressure.
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