Nvidia becomes first company to reach $5 trillion valuation
Nvidia became the first company ever to reach a $5 trillion market valuation on October 29, 2025. Driven by a strong rally fueled by the artificial intelligence boom, Nvidia’s stock surged, crossing the threshold of approximately $205.76 per share needed for this market cap. This milestone highlights Nvidia’s transformation from a niche graphics chip manufacturer to a dominant player in AI, with significant deals including $500 billion in AI chip orders and plans to build seven AI supercomputers for the US government.
The company’s rise is also tied to collaborations with major firms like OpenAI, Oracle, Nokia, and Eli Lilly, and it has become a pivotal factor in US economic growth, with data center investments containing Nvidia chips accounting for an estimated 92% of US GDP growth in the first half of the year. Nvidia’s achievement eclipses the market capitalization of all other companies and most countries’ GDPs except the US and China, symbolizing a historic moment in tech and AI history.
The main drivers behind Nvidia’s valuation surge to $5 trillion are:
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Explosive demand for AI chips: Nvidia’s GPUs have become the backbone of almost all modern AI systems, powering large language models like ChatGPT, Gemini, and Claude. The global rush for AI computing power has caused Nvidia’s data center revenue to rise in triple digits year-over-year, with tech giants such as Microsoft, Amazon, and Meta being major customers.
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Strategic partnerships and investments: Nvidia revealed $500 billion in AI chip orders expected over the next four years and announced plans to build seven AI supercomputers for the US Department of Energy. The company also made a $1 billion investment in Nokia to jointly develop AI-native telecom networks, including 6G infrastructure, expanding its presence beyond chips into telecom markets.
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Government collaborations: Nvidia is deeply involved in government projects, helping build the largest AI supercomputer in the US and several advanced AI computing facilities in national labs. This has solidified its role as a key player in AI infrastructure.
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Market perception as a “picks and shovels” provider: Investors see Nvidia as essential to the AI boom, providing crucial technology needed by many companies building AI systems. This has led to strong investor confidence and institutional buying driving stock momentum.
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Stock momentum and investor conviction: Nvidia’s shares surged on high trading volume, breaking key resistance levels and fueling a rally that outpaced major US indexes. The stock gained nearly 78% year-to-date, reflecting enthusiasm for Nvidia’s AI leadership.
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Expansion of AI infrastructure: Nvidia’s contributions are fueling AI infrastructure growth that accounts for a significant portion of US GDP growth, estimated at about 92% in the first half of the year, highlighting its economic impact.
While investors remain bullish, analysts caution that the high valuation leaves little margin for error, as the company trades at a high forward P/E ratio, and risks include regulatory export controls and potential supply chain disruptions.
Nvidia’s valuation surge is primarily driven by its dominant position in AI chip technology, large AI infrastructure orders, strategic partnerships, government collaborations, and strong investor confidence in the AI boom’s future growth.
