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Nvidia's $1.18 trillion market capitalization overtook the entire crypto market this week, as shares in Wall Street’s AI-darling climbed to an all-time high.
The chipmaker’s stock hit $502 on Thursday after Nvidia reported $6.2 billion in net profit on $13.5 billion in total revenue for its second fiscal quarter—double compared to the same period a year ago—and surpassing analyst expectations.
The company is currently the sixth largest among publicly traded firms, towering over Elon Musk’s Tesla or Mark Zuckerberg’s Facebook. Meanwhile, the crypto market was valued at $1.09 trillion across more than 10,000 coins tracked by CoinGecko.
“Nvidia stock price speaks to the fact that they are a leader in producing hardware for AI,” 3iQ head of research Mark Connors told Decrypt. “As it relates to crypto, it shows how early we are.”
As crypto continues to find its footing after tough sledding last year, where token prices dipped and several firms collapsed amid the chills of crypto winter, OpenAI’s release of ChatGBT has turned AI technology into a hot commodity.
“Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” Nvidia founder and CEO Jensen Huang said in a statement on Wednesday. “A new computing era has begun.”
ChatGPT’s easy-to-use interface makes AI technology as accessible as typing into a chat box. It stands in stark contrast to search engines like Google and the steep learning curve in crypto, Connors noted.
“Will Ethereum become a verb like Google?” Connors said. “Not in the next year or two.”
Nvidia's strong fiscal quarter was fueled by 141% sequential growth in its data center segment, where the chipmaker produces GPUs for high-performance computing and cloud applications. The segment took in a record $10.3 billion in revenue alone.
The chipmaker’s surging stock price is a direct result of growing revenue expectations, and crypto needs to embrace use cases like tokenization in order to attain similar results, Lumida Wealth Management CEO Ram Ahluwalia told Decrypt.
“There's a rational basis for Nvidia's price increase that has to do with revenue, and tokenization enables digital assets to generate a yield or greater participation from investors,” he said. “The more crypto can embrace tokenization and bringing real-world assets on-chain, [...] the better the price trajectory will be for digital assets.”
Ahluwalia added that crypto and Nvidia aren’t necessarily in competition with each other, and investment opportunities in AI don’t take away from the value of crypto. But in order for the industry to catch up, securities laws need to be adapted.
“The most exciting opportunities in tokenization would trigger a securities laws violation,” he said. “Really unlocking token economics, which gives you value and price appreciation, is updating securities laws and having that direct conversation with Congress and the SEC.”
Nvidia's flip follows a flash crash last Friday that erased $84 billion in crypto market cap. Bitcoin sunk 6% over the course of two hours to around $26,250, while altcoins like Ripple (XRP) slipped 17% to $0.47 during that span, according to CoinGecko.
The drop was attributed to reports Elon Musk’s SpaceX sold an unspecified amount of Bitcoin and macro jitters after China’s Evergrande, one of the country’s largest property developers, filed for Chapter 15 bankruptcy.
Still, crypto’s market cap has recovered since it slipped as low as $826 million last December, not long after the collapse of crypto exchange FTX. And year-to-date, Bitcoin has grown over 50% from around $16,600 in January.
Compared to Nvidia, the best-performing name in the S&P 500 so far this year, Bitcoin’s gains appear tepid. When shares in the chipmaker touched an all-time high on Thursday, they were up more than 250% from $143 at the beginning of January.