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Chipmaker firm Nvidia's 591,078% rally to most valuable stock came in waves

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On Tuesday, that run culminated in Nvidia unseating Microsoft Corp. as the world’s most valuable company with a market capitalisation of $3.34 trillion
The company’s key to early success: getting its technology in video-game consoles like Microsoft’s Xbox and Sony’s PlayStation | Photo: Bloomberg
The year was 1999. Steve Jobs had recently returned to lead Apple. Intel was the dominant force in semiconductors. And a little-known chipmaker named Nvidia made its debut on the Nasdaq stock exchange.
It took less than three years for Nvidia Corp. to ascend into the S&P 500 — replacing the disgraced oil-trading conglomerate Enron, no less.
But even then, few people would have bet that the company would go on to become the best performing stock of the last quarter-century, posting a total return of 591,078 per cent since its initial public offering, including reinvested dividends. It’s a difficult number to comprehend and a testament, in part, to the financial mania brewing around artificial intelligence and how investors have come to see Nvidia — which makes the cutting-edge chips powering the technology — as the single-biggest winner of the boom.
On Tuesday, that run culminated in Nvidia unseating Microsoft Corp. as the world’s most valuable company with a market capitalisation of $3.34 trillion. More than $2 trillion of that value has been added this year.
The company’s rise was by no means assured — and neither is its staying power at the top of the S&P 500. Long-time investors in Nvidia have had to stomach three annual collapses of 50 per cent or more in the stock. Sustaining the current rally will require customers to keep spending billions of dollars a quarter on AI equipment, whose returns on investment are so far relatively small.
What ultimately paved the way for Nvidia to climb to the top, though, was the company’s big bet on graphics chips and the vision of co-founder and Chief Executive Officer Jensen Huang that the industry would shift to what he calls “accelerated computing,” something his chips are inherently better at than the competition.

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