What Happened? | Santa Clara, California-based technology company Nvidia has become the first private company to achieve a five trillion-dollar market valuation, which was achieved after Nvidia's stock rose three percent on Wednesday. The rise of Nvidia comes on the heels of a string of deals the company made with OpenAI, Oracle, and Nokia. | Since ChatGPT was launched in 2022, Nvidia's stock prices have increased by a factor of twelve as the growing popularity of AI fueled sales of the company's graphics chips, which are essential components of the infrastructure that makes AI work. | Why it Matters | Nvidia achieved the five trillion-dollar milestone only three months after passing the four trillion-dollar valuation mark, illustrating a high rate of growth in a relatively short time. The surging popularity and adoption of AI programs globally is the reason Nvidia's market value has grown so much so quickly. Based on current economic indicators, that trend is likely to continue in 2026. | The growing popularity and usage of AI can be seen in several different economic sectors. In the retail sector, Walmart recently announced a partnership with OpenAI to allow users of ChatGPT to shop directly from Walmart's stores. In health care, Eli Lilly has announced a partnership with Nvidia to build a supercomputer that will use AI to develop novel medications and drugs. The versatility of AI applications has driven its growth on a global scale. | Nvidia manufactures graphics chips for video games, but because most AI programs process huge amounts of visual and audio data almost instantly, Nvidia's high-end gaming chips are also ideal for data centers that support AI programs. By selling a high number of graphic chips to companies building or using AI, Nvidia has been able to vastly expand the volume of graphic chips it sold, which has in turn, fueled its new five trillion-dollar market valuation. | Political influence has also helped Nvidia, which, like many companies, has been caught between the ongoing trade war between the U.S. and China. The Trump Administration approved the sale of Nvidia's H20 chips in China, which opened up a huge new market to the company for increased sales. Along with the U.S., China is a leading AI power, and Nvidia's chip sales in China alone are worth tens of billions of dollars annually. | How it Affects You | Critics have argued the growth of AI has been exaggerated, and that the global market is being set up for the collapse of an AI bubble. But the continued massive investments by technology companies, along with the corresponding rise in the use of AI across many sectors of the economy and society, suggest AI is here to stay, and concerns about an AI bubble may be themselves overstated. | | More breaking news below… | Counter-drug police raid in Rio De Janeiro kills over one hundred people as United Nations calls for an investigation. Read more here… | Meta, Microsoft, and Google post strong earnings on the back of AI investment but rising costs and uncertain returns raise questions about what comes next. Read more here… | Trump and Xi strike trade and resource deals in South Korea, including agreements on rare earths and soybean purchases, while deeper issues remain unresolved. Read more here… |
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