Figure: American chipmaker Nvidia once became the company with the highest market value in the United States. \AFP

[Ta Kung Pao News]According to the Wall Street Journal: Driven by the demand for artificial intelligence (AI) chips, the share price of US chip giant Nvidia reached the top on the 19th, becoming the US listed company with the highest market value. The Wall Street Journal wrote that this scene is reminiscent of Cisco during the Internet boom 20 years ago. Nvidia’s market value was surpassed by Microsoft on the 20th, falling back to second place.

This is the first time a company other than Microsoft and Apple has taken the title of the most valuable company since Amazon briefly topped the list in February 2019. The last time a large computing infrastructure provider in the United States became the most valuable company was in March 2000, when networking equipment company Cisco topped the list at the height of the Internet boom. Like Nvidia, Cisco also topped the list after surpassing Microsoft.

Technology giants such as Microsoft, Meta and Amazon rushed to invest, leading to a chip buying frenzy. In the most recent quarter, Nvidia earned $26 billion, more than three times the same period last year. Nvidia was the best performing stock in the S&P 500 last year, with a market value of $3 trillion this month, less than four months away from crossing the $2 trillion mark.

John Chambers, who served as CEO of Cisco during the dot-com boom, said Nvidia has some similarities with Cisco. “In terms of the size of the market opportunity, its impact is equivalent to the sum of the Internet and cloud computing.” “The speed of change is different, the market size is different, and the company is at a different stage when it reaches its peak market value.”

As money pours into AI, investors are still skeptical about whether the current AI boom in the U.S. stock market can continue. According to Sequoia Capital estimates, about $50 billion has been invested in Nvidia chips since the start of the AI ​​boom, but generative AI startups have only generated $3 billion in sales. Sonya Huang, a partner at Sequoia Capital, said this imbalance represents “some real problems that need to be solved.”

Neil Shearing, chief economist at Capital Economics, said on Monday that the AI ​​bubble is likely to help U.S. stocks continue to rise over the next year and a half, but it will eventually burst and the U.S. market is “destined to have a period of significant underperformance.”