Nvidia rewrites the laws of growth

The word “unprecedented” is an overused one, but it’s appropriate in the case of tech company Nvidia, which is on the verge of overtaking Apple as the world’s second-most valuable company.

Now worth $2.8 trillion (€2.6 trillion) to Apple’s $2.9 trillion, Nvidia’s latest stunning earnings numbers resulted in it gaining some $500 billion in market capitalisation in just three days.

That dwarfs January’s surge, when the company recorded a monthly gain of $296 billion, breaking the record it set ($248 billion) just eight months earlier.

Growth rates typically taper off as companies get bigger, but not here. Nvidia shares have enjoyed an 18-fold increase since 2020, when the company was valued at $145 billion. They tripled in 2023 and have already more than doubled in 2024 – unprecedented numbers for a company of this size.

One analyst reckons another tripling is possible, saying Nvidia will be worth $10 trillion by 2030. “It just seems wrong,” says Josh Brown of Ritholtz Wealth Management. However, Brown’s colleague, Michael Batnick, notes the surging share price merely reflects the surge in earnings, with Nvidia’s free cashflow rising seven-fold over the past year.

“It’s hard finding words to describe what this business is doing,” he says. “It’s rewriting what we thought were the laws of growth.” Put another way, everything Nvidia is doing is, well, unprecedented.