It has been a long four months for Nvidia shareholders. The world’s most valuable company has finally set a new record high, ending a 96-trading-day drought.
Of course, a 96-day wait would be unremarkable by the standards of most companies, but Nvidia is another matter, with Bespoke Investment noting this was shareholders’ third-longest wait since ChatGPT’s November 2022 launch.
The four-month lull is easier to put in perspective when the numbers – Nvidia was worth $5.8 trillion at its recent peak – are considered. Comparisons between Nvidia and entire national stock markets have become routine, but Japan was the one big exception.
No longer – Nvidia now accounts for 5.2 per cent of the MSCI All Country World Index, slightly more than Japan and more than every country except the US.
Taiwan (3.5 per cent), the UK and Canada (2.9 per cent each) trail well behind, while Nvidia’s weighting is almost three times that of Germany’s.
A casual observer might think this screams AI bubble, but Nvidia is not an obviously expensive stock. It trades on about 15 times estimated earnings, according to market data from Finviz, making it cheaper than 295 of the S&P 500’s component stocks.
The company, too, is acting as if shares are reasonably priced. A fortnight ago, Nvidia authorised an additional $150 billion share buyback, the largest such authorisation in history.
The record-breaking numbers make for an odd combination, with Nvidia simultaneously looking enormous enough to distort global equity indices, whilst remaining relatively inexpensive against the earnings it is producing.