Nvidia has become the first company in the world to reach a market capitalization of $4 trillion, after its shares rose 2.4% on Wednesday to $164 per share, continuing to benefit from the sustained surge in demand for AI-related technology.

The U.S. company had first crossed the $1 trillion mark in June 2023, and has maintained rapid growth ever since.

Dan Ives, tech analyst at Wedbush Securities, described the milestone as “a historic moment for Nvidia,” adding: “They’re the only game in town — their chips are the new gold and oil.”

Nvidia shares had plunged in April when global markets were shaken by the escalating trade war led by U.S. President Donald Trump. Despite ongoing concerns about Trump’s trade policies, Nvidia’s stock has continued to rise since spring, reaching this latest milestone.

Eight years ago, Nvidia stock was worth less than 1% of its current value, driven at the time by competition with AMD over graphics card dominance. Today, its meteoric rise is tied to surging demand for the chips that power generative AI models such as ChatGPT.

Nvidia’s dramatic ascent has also elevated its CEO and co-founder, Jensen Huang, whom Mark Zuckerberg recently dubbed “the Taylor Swift of tech” — a reference to his rockstar-like status, particularly in Taiwan.

The company’s rising market value reflects Wall Street’s confidence in the AI sector, despite the turbulence caused by broader U.S. economic policies.

Nvidia reported revenues of $44.1 billion in the first quarter, up 69% year-over-year, with earnings per share reaching $0.81.

What makes Nvidia so special?

Origins:

Nvidia was founded in 1993 — during a now-famous meeting at a Denny’s restaurant — with a focus on designing a specific type of programmable chip.

For years, the U.S. chip market was dominated by Intel and AMD, who produced CPUs (central processing units) for general computing tasks.

Nvidia, by contrast, specialized in GPUs (graphics processing units), which had stronger image-rendering capabilities — initially useful for video games and graphics applications.

Eventually, it became clear that GPUs could execute parallel calculations more efficiently than CPUs, making them more energy-efficient and better suited for complex computational tasks.

Over time, major chipmakers began manufacturing their own GPUs, but they were late to the game. Nvidia had first-mover advantage, along with a suite of developer-friendly software, and a streamlined supply chain that enabled large-scale GPU production with unmatched speed and efficiency.

For example, carmakers began using Nvidia chips in driver-assistance programs that process visual data from sensors. All Tesla vehicles now include Nvidia hardware. Still, up until 2020, Intel’s market cap was larger than Nvidia’s.

COVID-19 and the AI explosion

During the pandemic, the shift to remote work, demand for data centers and cloud services, and booming interest in video games accelerated Nvidia’s revenues.

Then, Silicon Valley — led by OpenAI — began to recognize AI’s potential to transform business operations.

Thanks to its software ecosystem and efficient supply chain, Nvidia was ideally positioned to provide the computing power needed for AI adoption.

Nvidia’s fortunes took off like a rocket. At its current share price, the company is valued at nearly $3 trillion, rivaling Apple.

In a past CNBC interview, CEO Jensen Huang said the company’s success was a mix of “skill and luck,” noting: “We believed something new would happen someday, and the rest just required a little luck. It wasn’t foresight — it was accelerated computing.”

Today, virtually every major tech firm — including Amazon, Google, Meta, Microsoft, and Oracle — uses Nvidia chips.

Bloomberg has described Nvidia’s chips as “the backbone of AI model training,” while PNC analyst Amanda Agati called its dominance “near-total monopoly.”

Raj Joshi, senior VP at Moody’s, said Nvidia is “the dominant player in AI infrastructure,” and while other companies are racing to catch up, Nvidia’s 30-year experience designing GPUs gives it a major advantage.

Joshi added that Nvidia also leads in sectors like healthcare, saying: “They have a strong foothold in those markets too.”

The race to catch up

Thanks to its unique position, Nvidia can charge a premium for its chips — manufactured in Taiwan and so scarce that AI startups often complain about supply shortages.

The CHIPS and Science Act, passed under the Biden administration in 2022, aims to boost domestic GPU production, but doubts remain over whether the U.S. can meet demand.

Commerce Secretary Gina Raimondo said this week: “The volume of chips AI companies need is staggering,” and hinted that more federal support may be needed to keep up.

The new market anchor

Nvidia’s financial performance now holds major weight across U.S. stock indexes, according to Amanda Agati. “Nvidia has become a market anchor,” she said. “If data is the new oil, Nvidia is leading the pack.”

Originally known for gaming GPUs, Nvidia now provides the foundation for most AI applications.

Alan Priestley at Gartner called Nvidia “the technological leader in AI enablement,” while Dan Hutcheson of TechInsights said: “What Intel was to the PC, Nvidia is to AI.”

ChatGPT, for instance, was trained on 10,000 Nvidia GPUs within a Microsoft supercomputer — one of several such AI-focused systems, some public, others not.

According to CB Insights, Nvidia commands about 95% of the market for AI-focused GPUs. Its chips, used in data centers, cost around $10,000 each, with newer, more powerful versions priced even higher.

How did Nvidia gain this dominance?

The answer lies in a bold bet on its own tech — and good timing.

In 1999, Nvidia began developing GPUs for better image rendering. In 2006, Stanford researchers discovered the chips could accelerate mathematical computations, prompting Huang to invest in making GPUs programmable — expanding their use beyond graphics.

This became the foundation of modern AI.

In 2012, the AI model AlexNet was unveiled, trained on just two Nvidia chips. It completed training in days, not months — and researchers took notice.

Word spread quickly, and demand for Nvidia GPUs surged as researchers began building new AI tools.

Dominance and competition

Nvidia doubled down, developing AI-specific chips and easy-to-use software, pulling further ahead of rivals.

Startups like Metaphysic use Nvidia chips to train models that generate lifelike video — such as the viral Tom Cruise deepfake in 2021.

“There’s no substitute for Nvidia,” said co-founder Tom Graham. “They’re too far ahead.”

Still, Nvidia’s dominance is not unshakable. Rivals like AMD, Intel, and startups like Graphcore are developing custom AI chips.

Graphcore CEO Nigel Toon said: “We’ve built a processor tailored to AI as it exists today and will evolve in the future,” but admitted that competing with Nvidia is a steep challenge.

Ian Buck of Nvidia responded: “Everyone needs AI now — and others will need to find their role in supporting it.”

The U.S. Energy Information Administration (EIA) on Wednesday released its official weekly crude oil inventory data, which showed an unexpected increase in stockpiles.

According to the government agency, U.S. crude oil inventories rose by 7.1 million barrels to 426.1 million barrels last week, defying market expectations for a decline of 1.5 million barrels.

Meanwhile, gasoline stockpiles fell by 2.7 million barrels to 229.5 million barrels, and distillate inventories — which include heating oil and diesel — declined by 0.8 million barrels to 102.8 million barrels.

U.S. stock indexes rose at the start of trading on Wednesday as markets assessed developments in tariff policy and awaited the release of the Federal Reserve’s meeting minutes.

On Tuesday, U.S. President Donald Trump expanded the scope of his global trade war by announcing a 50% tariff on copper imports. He added that long-threatened tariffs on semiconductors and pharmaceuticals were also coming soon.

The announcement followed a day after Trump imposed sharp tariff hikes on 14 trade partners, including key U.S. suppliers South Korea and Japan. He also renewed his threat to impose 10% tariffs on imports from Brazil, India, and other BRICS countries.

Separately, Trump renewed his attacks on Federal Reserve Chairman Jerome Powell, calling once again for his immediate resignation.

Later today, the Federal Reserve will release the minutes of its most recent meeting, which markets will scrutinize for signals regarding the central bank’s policy outlook.

As for market performance, the Dow Jones Industrial Average rose slightly by less than 0.1% (equivalent to 3 points) to 44,240 points by 16:18 GMT. The broader S&P 500 index gained 0.1% (7 points) to reach 6,233 points, while the Nasdaq Composite climbed 0.4% (80 points) to 20,498 points.

Copper prices declined during Wednesday’s trading after Tuesday’s sharp rally, which was driven by new tariffs announced by U.S. President Donald Trump on the red industrial metal.

On Tuesday, President Trump announced a 50% tariff on copper imports and revealed that long-awaited duties on semiconductors and pharmaceuticals would be announced soon, in a move that expands the scope of his ongoing trade war that has shaken global markets.

The announcement came just one day after Trump imposed steep tariffs on 14 trade partners, including major U.S. suppliers like South Korea and Japan. He also renewed his threat to impose 10% tariffs on imports from Brazil, India, and other BRICS nations.

While noting that trade talks were progressing well with the European Union and China, Trump added that he was just days away from sending a tariff notice to the EU.

The remarks, delivered during a Cabinet meeting at the White House, sparked further concern in a global economy already struggling with the fallout from tariffs either imposed or threatened on exports to the world’s largest consumer market.

Following Trump’s announcement, U.S. copper futures jumped more than 10% amid expectations that the tariffs will join existing duties on steel, aluminum, and automobiles. Copper is considered a vital input for electric vehicles, military equipment, power grids, and various consumer goods. The effective date of the new tariffs has yet to be announced.

Shares of U.S. pharmaceutical companies also fell after Trump threatened to impose tariffs of up to 200% on imported drugs, though he noted implementation might be delayed for nearly a year.

In response, other countries signaled they would try to mitigate the impact of these measures, especially after Trump postponed the Wednesday tariff deadline to August 1.

The Trump administration had previously promised “deals within 90 days” after unveiling in April a tariff list tailored to each country. So far, only two deals have been reached — one with the United Kingdom and one with Vietnam. Trump said an agreement with India is close.

“It’s time for the United States to start collecting money from countries that have been robbing us,” Trump said. “They’ve been laughing behind our backs, thinking we were stupid.”

In a post on Truth Social Tuesday evening, Trump said “no fewer than seven tariff notifications” would be issued Wednesday morning, with more to follow in the afternoon. He gave no further details.

Many trade partners around the world have complained that even basic framework negotiations are difficult due to the unpredictable manner in which new tariffs are announced, making internal compromise more difficult.

Highest tariff level since 1934

According to Yale University’s Budget Lab, Trump’s new tariffs on imports from 14 countries raised the effective tariff rate on American consumers to 17.6%, up from 15.8% previously, marking the highest level in 90 years.

The Trump administration promotes the tariffs as a key source of revenue. Treasury Secretary Scott Bessent said the U.S. has collected about $100 billion in tariffs so far, with projections reaching $300 billion by year-end, compared to an average of $80 billion annually in recent years.

U.S. markets edged lower on Tuesday, with the S&P 500 closing slightly down after a steep selloff on Monday following the tariff announcement.

Trump said he would “likely” notify the European Union within two days of the tariff rates expected on its exports to the U.S., noting that the 27-nation bloc has been “very good” to his administration in ongoing trade talks.

According to European sources, the EU aims to reach a deal before August 1 that includes concessions in key export sectors such as aircraft, medical equipment, and spirits. Brussels is also weighing a framework that would protect European carmakers with major manufacturing presence inside the U.S.

However, German Finance Minister Lars Klingbeil warned that the EU is prepared to retaliate if necessary. “If we cannot reach a fair trade deal with the United States,” he told parliament, “then the European Union is ready to take countermeasures.”

Japan, which may face a 25% tariff, is seeking exemptions to protect its massive automotive industry, while refusing to make concessions on agriculture — a sector with strong domestic political influence. Chief trade negotiator Ryusei Akazawa said a quick deal is unlikely.

South Korea, which also faces potential 25% tariffs, said it would intensify trade talks in the coming weeks “to reach a mutually beneficial outcome.”

As for relations with China, Washington and Beijing agreed on a general trade framework in June, though many details remain unclear. Investors are watching closely to see whether the deal collapses before the U.S. deadline of August 12 or results in a lasting truce.

“We’ve had a very good relationship with China lately,” Trump said. “We’re getting along extremely well. They’ve been very fair in our trade agreement, frankly.”

He added that he is in regular contact with Chinese President Xi Jinping.

New tariff list targeting multiple countries

Trump announced that the United States would impose:

25% tariffs on goods from Tunisia, Malaysia, Kazakhstan

30% tariffs on South Africa and Bosnia and Herzegovina

32% tariffs on Indonesia

35% tariffs on Serbia and Bangladesh

36% tariffs on Cambodia and Thailand

40% tariffs on Laos and Myanmar

Meanwhile, the U.S. Dollar Index rose slightly by less than 0.1% to 97.5 points at 16:00 GMT, recording a high of 97.7 and a low of 97.4.

In U.S. trading, copper futures for September delivery fell 3% to $5.51 per pound at 15:55 GMT.