Nvidia sets a new world record: it is now worth almost three times the Spanish GDP.

BarcelonaAbout a year ago, in June 2024, Nvidia made headlines for having achieved the title of the most valuable company in the world, ahead of Microsoft and Apple. Now, the large American chip manufacturer has reached a new milestone: its capitalization now exceeds 4 trillion dollars – almost three times the GDP of Spain – and sets a new world record. With the current situation of international trade war following the tariff policy of US President Donald Trump, this meteoric rise in the share price of the first American company is even more striking.

As of April 2, the "liberation day" on which Trump announced reciprocal tariffs Around the world, Nvidia's stock price plummeted. The new taxes also impacted its semiconductors, a product that is in the spotlight due to the trade battle with China. Thus, from $120 per share on March 25, the company fell to $94.30 per share on April 4, its lowest price of the entire year. It was not clear that it could recover to the levels of June 2024, much less surpass them. Be that as it may, this week it surpassed $160 per share and closed Friday above $166.

According to Xavier Brun, a professor of the master's degree in financial markets at the Barcelona School of Management (UPF), this meteoric recovery by Nvidia shows that investors have stopped believing Donald Trump's threats. "What the market is saying is that with Trump's back and forth on tariffs—"I'm putting them on now, I'm taking them off now"—he no longer has credibility and people don't believe him," the expert points out. "Investors are describing Trump as a coward, a man who threatens, but then backs down," he adds.

The fact is that the acronym has been circulating on social media for months. WAD, the acronym for Trump Always Chickens Out (In English, Trump always backs down.) "It's clear the market doesn't believe him; this week Trump said he'll reimplement the tariffs he imposed in April, and the impact on the market has been very muted," Brun explains. In fact, after April 2, "because Nvidia shares were so cheap, people started buying them, and that's been going on until now," the academic notes.

Viable in the long term?

Nvidia is an American company founded in 1993 and headquartered in Santa Clara, California. It is one of the leading manufacturers of GPUs, the graphics processors used to generate graphics and visualizations on computers. These devices are essential for applications that require high-quality graphics performance, such as games and video editing programs, and now also for artificial intelligence. Nvidia's most popular products are the GeForce and nForce lines for gaming, and the Quadro series for graphics processing. Its most prominent figure is Jensen Huang, who co-founded the company and is currently its president and CEO. The company went public in 1999 and has exploded in recent years thanks to its dominance of the market for chips needed for artificial intelligence software.

But to what extent can Nvidia maintain these price levels? To answer this question, Xavier Brun uses a comparison with the real estate market: "I always interpret the stock market as an apartment: Nvidia would be like a luxury apartment in the most luxurious area, a penthouse on Fifth Avenue in New York," he compares. So what is Nvidia expected to do? "This 200 m² penthouse is expected to remain 200 m² in the future; so today Nvidia is this penthouse and a fairly high price per m² is being paid," says Brun.

There's also the potential for profit growth: "Given that the data centers, which are what Nvidia's chips require, have approximately 150,000 Nvidia GPUs, and around 300 will be built at a price of $30 trillion, or around $1.5 trillion."

"That means Nvidia's sales will be equivalent to 30-40% of Spain's GDP. But who's going to pay for this?" Brun asks. "It will have to be their partners or clients: Meta, Amazon, etc. The question is, will they be able to afford it?" At the same time, once these planned 300 data centers are built, what will happen? "It's like a gold rush. The shovel manufacturer was the one who really made money from the gold rush, but once they'd sold the shovel to everyone, what then? It's the same with chips; once everyone has them, they won't be able to maintain the same level of sales," the expert points out. Added to all this is the potential competition that Nvidia could face: "It'll be a matter of time." In conclusion, the professor believes the company may be overvalued: "It's a penthouse on Fifth Avenue, and in April the price was attractive, but right now, not so much."