Nvidia CEO reassures investors after shares ‘evaporate’ $430 billion

After the decline caused the market capitalization to “evaporate” by $430 billion, Nvidia held its annual meeting to reassure investors, and at the same time introduce the next generation of AI chip products.

Mr. Huang reassured investors at the annual meeting on June 26. Photo: CNN.

At the meeting on June 26, CEO Jensen Huang took advantage of the gathering of investors to highlight the company’s growth opportunities in the context of the AI boom, including the field of robotics and sovereign AI.

The next wave of AI will automate $50 trillion in heavy industries. Factories will use robots to build robots and Nvidia will benefit from that,” Huang said.

Huang also noted the company’s strong position in achieving the demand for sovereign AI, i.e., a country’s ability to produce AI using its own infrastructure and data.

The CEO of Nvidia affirmed that the upcoming Blackwell is the most successful product built by Nvidia, even the most successful in the history of the computer industry.

Mr. Huang affirmed that Blackwell is the most successful product built by Nvidia. Photo: Bloomberg.

According to Nvidia’s previous announcement, the upcoming GPU will have 208 billion transistors, far exceeding the 80 billion transistors that the current flagship H100 GPU has. The next-generation chip performs some tasks 30 times faster than its predecessor. Furthermore, Blackwell uses the Transformer Engine’s second-generation transformer engine, which doubles the computational volume with 4-bit AI inference.

Analysts call Nvidia’s Blackwell system “the most ambitious project in Silicon Valley.”

Huang emphasized that Blackwell will be adopted by “every major cloud service server manufacturer and leading AI companies”, including Amazon, Google, Meta, Microsoft, ChatGPT maker OpenAI, Tesla and also Elon Musk’s X.

$430 billion ‘flying colors’ after 3 days

Since April, Nvidia’s market capitalization has increased by $1,000 billion, reaching $3,000 billion in just 30 days. By comparison, it took Warren Buffett about 60 years to build Berkshire Hathaway into a company worth nearly $1,000.

On June 18, Nvidia’s market value soared to $3.340 trillion, surpassing Microsoft to become the most expensive company in the world. The company’s shares gained rapid momentum.

Nvidia stock price movement in the past 6 months (Unit: USD/share). Photo: LSEG/FT.

According to analysts at Deutsche Bank, Nvidia has contributed about a third of the S&P 500’s growth this year, making it one of the most influential companies ever listed on the S&P 500.

That’s why Nvidia’s decline last week and on June 24 stunned investors. In just 3 days, the company’s capitalization has fallen by 430 billion USD.

“Stocks reversing after peaking is not uncommon in the securities industry. But for high-impact stocks like Nvidia, even small ups and downs have global consequences,” said Jochen Stanzl, chief market analyst at CMC Markets.

The higher the risk, the greater the attraction

On June 25, Nvidia’s shares rebounded, rising nearly 7% — the second-highest gain in the S&P 500, pushing the company’s market capitalization back above the $3 trillion mark again. However, the heavy losses from the decline at the beginning of the week made many analysts skeptical.

“Nvidia is overvaluing its company. The company’s market capitalization has surpassed the 100 companies with the highest market capitalization listed on the London Stock Exchange. However, their sales are 4% lower than that index,” said Emily Bowersock Hill, CEO of Bowersock Capital Partners.

Analysts at The Carlyle Group warn that the Nvidia stock bubble is likely to burst, similar to Cisco’s case. The company briefly became the world’s most expensive company in March 2000. However, within a year, Cisco lost about 80% of its market capitalization when the tech bubble burst and telecom companies sharply cut spending on broadband infrastructure.

Despite the risks, many investors still choose to buy Nvidia stock. Photo: Alamy.

Despite warnings from experts, many investors are still willing to spend money on Nvidia shares because they believe in the development of AI and the direction of the company. Nvidia will launch the Blackwell chip this year. Analysts forecast that this generation of chips could usher in a new growth cycle for Nvidia and its partners.