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Nvidia and Microsoft Approach $4 Trillion Market Caps
As of July 3, 2024, Nvidia is more than 3% away from a $4 trillion market capitalization, while Microsoft is also edging closer. Nvidia’s market cap has surged from billions to trillions in less than three years, driven largely by its dominance in artificial intelligence (AI) technology, where the company converted over half of its sales into profits. As of year-to-date, Nvidia’s stock has increased by over 18%, recovering from an early 30% drop.
On December 26, 2024, Apple approached a $3.9 trillion market cap, remaining 2% shy of the $4 trillion milestone. The valuation of both Nvidia and Microsoft hinges on their capacity to maintain sustainable earnings growth. Nvidia has seen its annual net income explode from under $10 billion to approximately $76.8 billion, while Microsoft’s net income has doubled in five years. To justify high market valuations, both companies need to continue demonstrating solid earnings growth.
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