A precursor to how it will go comes on Wednesday, when Nvidia – the world-leading manufacturer of graphics cards and processors for artificial intelligence (AI) and machine learning – presents the company's report for the third quarter.
The constantly increasing demand for Nvidia's products for all AI initiatives around the world has led to a 850 percent increase in the company's stock price since the AI boom took off two years ago. Just since the turn of the year, the stock has risen by over 200 percent.
Strong profit increases
A long series of strong profit increases and significant revenue growth, combined with ambitious plans for future products, lies behind Nvidia's stock market success, according to Carl Armfelt, portfolio manager at TIN Fonder.
But if they miss their targets, it can also quickly go downhill. There are risk factors.
It is crucial that they technically succeed with their next-generation architecture called Blackwell.
The company's valuation can also take a hit due to the high expectations.
If they do not manage to grow revenue by 100 percent in 2025, the fall risk is greater than for other more traditional and mature industries. But if they succeed in meeting market expectations, the company is reasonably valued, says Armfelt.
Threat of trade war
An additional risk factor is an American export ban to China and Asia, which has been a large part of their revenue in recent years, says Armfelt.
The threat of trade war and de-globalization with Donald Trump as the US president next year can affect Nvidia, just like all other tech companies. It can, according to Armfelt, lead to a fragmentation of the market. But it does not necessarily have to lead to decreased demand for Nvidia.
Demand for AI infrastructure should increase significantly regardless of whether there are new tariffs or not, says Armfelt.
There is a risk that the semiconductor sector will be negatively affected by de-globalization, but then one should instead build domestic production capacity in each country, he adds.
American Nvidia has, ahead of Wednesday's report for the third quarter this year, knocked the American tech giant Apple off the throne as the world's highest-valued listed company. Nvidia's market value has since then fluctuated around 3,600 billion dollars.
In kronor, Nvidia is worth almost 40,000 billion after the price increase. This can be compared to the Swedish stock exchange's heavier stocks, such as AB Volvo, with a market value of 580 billion, or Atlas Copco, at 870 billion.
In fact, Nvidia, with its enormous price increase, now accounts for 7 percent of the S&P 500 index or roughly three times as much as the entire Stockholm stock exchange – which, including First North companies, has a value of around 11,640 billion kronor according to the stock exchange operator Nasdaq.
Nvidia tops the list of the world's highest-valued listed companies:
1. Nvidia (USA): 3,600
2. Apple (USA): 3,449
3. Microsoft (USA): 3,173
4. Amazon (USA): 2,223
5. Alphabet/Google (USA): 2,159
6. Saudi Aramco (Saudi Arabia): 1,804
7. Meta Platforms/Facebook (USA): 1,457
8. Berkshire Hathaway (USA): 1,008
9. Tesla (USA): 999
10. TSMC (Taiwan): 978
The amounts in the list are in billions of dollars. The prices were retrieved after closing on Thursday, November 14.
