1-day gain in Nvidia more than RIL's market value

Synopsis

Chipmaker Nvidia is the world’s fourth largest stock and Wall Street’s third after Microsoft ($3 trillion) and Apple ($2.8 trillion). Saudi Aramco is worth about $2 trillion. Nvidia soared more than 16% overnight and added $277 billion to its m-cap in just one day. In dollar terms, Reliance Industries is just about $243 billion.

NvidiaReuters

Valued at Rs 20 lakh crore, Mukesh Ambani’s Reliance Industries (RIL) looks like a mammoth on Dalal Street. But for the titans of Wall Street, this is loose change. Chipmaker Nvidia shares soared over 16% overnight and added $277 billion to its market capitalisation in just one day. In dollar terms, RIL is just about $243 billion.

To be fair, such a large amount of wealth creation in a single day is unprecedented in Wall Street’s history. The last such multi-billion dollar rainfall on Wall Street was recorded on February 2 when Meta shares zoomed $196 billion after the Facebook parent declared its first dividend and posted robust results.

Nvidia is now the world’s fourth largest stock and Wall Street’s third after Microsoft ($3 trillion) and Apple ($2.8 trillion). Saudi Aramco is worth about $2 trillion.

Nvidia, which controls about 80% of the high-end AI chip market, reported a Q4 revenue jump of more than threefold from a year ago to $22.10 billion and beat all expectations. At least 17 brokerages raised their price targets after the results. Among the most bullish, Rosenblatt Securities raised its price target to $1,400 from $1,100, implying a $3.5 trillion stock market value, Reuters reported.

The single-day rally in Nvidia has eclipsed not just India’s largest stock by market value (RIL), but several other American giants like Bank of America ($265 billion), Coca-Cola ($264 billion), Netflix ($255 billion), Accenture ($233 billion) and McDonald ($214 billion).

Also read | RIL turns bigger than McDonald’s, Netflix as Mukesh Ambani fuelling India’s $1 trillion dream

Back home, RIL shares are on the verge of crossing the Rs 3,000 mark after breaking above the Rs 20 lakh crore market capitalisation for the first time last week. Shares of Jio Financial Services, which demerged from parent RIL last year, today crossed the Rs 2 lakh crore mark for the first time following 56% jump in share prices in the last one week.

An earlier analysis by ICICI Securities shows that India can get its first $1 trillion stock only by 2032 if the largest stock’s m-cap to aggregate m-cap ratio sustains its average of 5.8%. The three contenders to the exclusive club are HDFC Bank, RIL and Bajaj Finance.

“HDFC Bank is the most likely stock with a hurdle rate of 25.5%. RIL could make it if its profit growth trajectory jumps up to 21%, while Bajaj Finance will need to maintain its past growth rate of ~35%-40% over the next decade to reach $1 trillion mcap,” it said.

Based on the historical average number of companies with m-cap greater than a-tenth of the top company’s m-cap, it is likely that India will have 30-40 stocks with $100 billion size in 2032. But only time will tell whether the difference between Dalal Street and Wall Street will narrow down or the big will keep on growing bigger.

Also read | Indian stocks close to hitting $5 trillion peak, retail investors win jackpot

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William Murphy

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