Nvidia Reaches Record Market Capitalization of $5.78 Trillion

Nvidia (NVDA) achieved a record intraday market capitalization of $5.78 trillion on Monday. Analyst Dan Ives, partner and senior managing director at Yorkville Ives & Co, stated on CNBC's Closing Bell that Wall Street's forecasts for the chipmaker are underestimated by 25–30%. Asian checks indicate demand for chips is 13–14 times higher than supply, he added. "This is the only chip in the world that is igniting the AI revolution," said Ives. Moreover, Nvidia leads a group of 10 stocks that contribute about 39% of the S&P 500 index, so a failure could impact far beyond the chip market.

Michael Burry, the investor behind "The Big Short," disagrees. He holds put options on Nvidia until September 2027 and believes the AI bubble could burst sooner. Singapore's DBS Group reported to Bloomberg that Nvidia is trading at a 17 times forward earnings ratio compared to 100 for Cisco before its collapse. Lehman Brothers filed for bankruptcy in September 2008 with $639 billion, marking the largest single-day market loss and freezing credit. Nvidia is investing in clients purchasing its chips. In August, the company announced preliminary agreements with six financial firms for $500 billion in client financing. A client default could hit Nvidia itself. The signal of funding breakage preceded the dot-com and real estate bubbles.

The dot-com crash illustrates how deeply the tech sector can fall. The Nasdaq Composite dropped from 5,048 in March 2000 to 1,139 by October 2002. Enron's bankruptcy in 2001 took down auditor Arthur Andersen. Creditors financing Nvidia's clients may also incur losses. Asia will feel this first: chip exports lifted South Korea's nominal production by 26.4% year-on-year in the second quarter. Ives may be right about profits. However, the market's resilience now depends not on Nvidia's survival, but on whether buyers of its chips can find new creditors.