Nvidia becomes most valuable company: Tech sector concerns

With a market capitalization of $3.34 trillion, Nvidia (NVDA) has become the most valuable publicly traded company on the New York Stock Exchange, surpassing tech giant Microsoft (MSFT).

However, this remarkable achievement has also prompted questions and concerns about the sustainability of such a lofty valuation and the potential risks from excessive market concentration within the technology sector.

Morning Brief Hosts Brad Smith and Madison Mills break down the details.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Angel Smith

Video transcript

Nvidia officially becoming the most valuable public company.

On Tuesday, the chip makers market caps are passing Microsoft and now worth $3.34 trillion.

This comes just a few weeks after the company crossed that $3 trillion threshold for the first time here, shares of NVIDIA, they're up over 170% so far this year there, you're taking a look at that continued rise that really kicked off in 23 and continues to move higher in 2024.

Pushing it to this its newest accolade that it can to for itself right now.

Yeah, it's interesting.

It's just the 12th company to hit a record high in the S and P over nearly 100 years.

So joining a very elite few there.

But I do want to talk about the negative elephant in the room that we got within video because the 10 top largest stocks have been up 17% in the past three months.

The rest have actually 1.3%.

So it's a question that we're having about concentration.

Another big issue at play is whether or not the growth that we're seeing with video is going to be able to continue.

March 2000 was the last time that A computing infrastructure company was the most valuable company in the S AND P. And that company was Cisco, clearly not near the top today.

So it leads to this broader question about whether or not this is another tech bubble moment, whether in video can continue to keep up the pace of growth that the street is looking and we should note most valuable US company here.

Of course, you gotta continue to remind ourselves that Saudi Aramco is out there somewhere, just sipping coffee and uh chilling uh on its laurels uh of sorts.

But anyway, one of the huge things as we're thinking about this market that for video, also thinking about the market market share that it comes with as well here, especially within some of the chip segment.

The graphics card chip shipments are up according to John Petty Research uh and the stats that they were able to put out for Q one of 2024 up by about 39% year over year.

And you think about the market share for that for NVIDIA, 88% in Q one according to J Pr and that's compared to 80% the prior quarter here.

You're thinking about some of the other players out there.

You're right to think about that.

A MD that fell uh from 19% to 12% Intel also struggling to keep up with some of that demand and the market share uh battle and jousting continues to move forward.

The, the last thing that I'll mention on this too is it's interesting where the street is continuing to rally right now.

And this is not a specific NVIDIA story, but it is a generative A I story where you're seeing according to factset research, some of the most bullishness and buy signals right now of the three top buy signal or by rated companies.

Um I believe it's Microsoft, Amazon Amazon should be the top one.

You've also got Microsoft and then lastly, uh you've got Delta Airlines, of course, of the airline fame.

Anyway, uh of those companies, Delta Airlines, Amazon Microsoft all seen the strongest buy ratings in the market according to data from backset, two of those three companies, of course, strong generative A I players for the market, right?

And really interesting though to see that the fundamentals still matter and that's why you've got Delta in that mix as well.

Brad 100%.