The AI powerhouse Nvidia saw its shares surge by 5.2% on Wednesday, raising its market capitalisation to $3.02 trillion (€2.9 trillion). This impressive growth has allowed Nvidia to surpass Apple and become the world's second-largest company, behind Microsoft, which holds a market capitalisation of $3.15 trillion. This milestone moment occurred one day before Nvidia’s 10-for-1 share split, which may have acted as a catalyst for the surge as investors sought to capitalise on the opportunity.
Things you need to know about Nvidia's 10-for-1 stock split
Investors who own Nvidia's stock at the end of Thursday will be eligible for the share split, allowing them to receive nine additional shares for each share they hold by then. This move will result in shares being valued at one-tenth of the market value at the closing price on Friday. Nvidia's stocks will halt trading during this period and will resume on Monday, 10 June, when the US markets open.
The primary objective of a stock split is to lower the price of individual shares, thereby enhancing accessibility for investors. It is worth noting that, while this action reduces the share price, it does not alter the company's market capitalisation or valuations.
Nvidia has also increased its quarterly cash dividend by 150% to $0.1 per share from $0.04 per share. The amount is on a post-split basis and "will be paid on Friday, 28 June 2024, to all shareholders of record on Tuesday, 11 June 2024," according to the company's press release in May.
Nvidia's share price sky high on increasing AI chip demand
Thanks to the artificial intelligence (AI) boom, the chip maker's share price has soared by 32% month on month, 145% year-to-date, and 214% over the past year.
Since 2023, Nvidia's Graphic Processing Units (GPUs) have been in high demand due to their advancements in supporting machine learning, Large Language Model (LLM) training, and supercomputing capabilities. The company holds a monopolistic position in AI chip manufacturing, accounting for approximately 80% of the market share. Its customers include all the major tech players, such as Microsoft, Amazon, Meta Platforms, Alphabet, and OpenAI. CFO Colette Kress revealed that approximately 45% of Nvidia's Data Centre revenue stemmed from these cloud providers. Demand for Nvidia's H100 was particularly robust, driven in part by Meta’s utilisation of Lama 3.
Additionally, CNBC reported that Tesla CEO Elon Musk is prioritising Nvidia's H100 GPUs for his privately owned social media platform X and his AI startup xAI ahead of Tesla. xAI, founded by Elon Musk in July 2023, is a startup AI firm that offers chatbots and AI-powered tools, competing with companies like OpenAI. He posted in X that Tesla would spend $10 billion (€9.2 billion) "in combined training and inference AI" this year.
Nvidia's meteoric performance in the past year
Nvidia's growth accelerated in the past year, with the revenue from Data Centre surging to $22. 56 billion in the first quarter of fiscal year 2025 from $4.28 billion in the first quarter of the fiscal year 2024, representing a 427% increase. The AI darling's overall revenue soared 262% to $26 billion in the same quarter, from $7.19 billion a year earlier.
CEO Jensen Huang has expressed confidence that Nvidia's new supercomputing AI GPU, Blackwell, will spearhead the company's growth in the coming year, stating: "We are poised for our next wave of growth. The Blackwell platform is in full production and serves as the cornerstone for trillion-parameter-scale generative AI."
Huang hinted at Nvidia's strategic shift towards diversifying its product offerings across various sectors, including consumer internet companies, automotive manufacturers, and healthcare providers, rather than solely focusing on cloud businesses.
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