Published August 28, 2026
With Nvidia yet again announced record earnings this week, we chose to briefly examine how Nvidia became the largest company in the US stock market.
Nvidia was the brainchild spawned from 3 engineers after a meal together at a Denny’s restaurant in San Jose, California. Founded in 1993, the company had turbulent beginnings, nearly going bankrupt in 1995 after their first product, a specialized graphics card, failed to gain customers. Nvidia survived a shakeout among graphics vendors and went on to thrive in the PC gamer space, widening their reach into mainstream PCs and laptops in the 2000s. Still Nvidia, while quite successful, was relatively small compared to the largest tech companies as the market for high end graphics processors was fairly limited and average selling prices for their specialized graphics chips — that went almost exclusively into consumer PCs — ranged mostly from $150-$600, with more volume toward the lower end.
Fast forward to today, where, once Nvidia started working with commercial customers on AI development and the training of LLMs, after having cut their teeth on server farms for crypto currencies, they knew that these new AI customers had vast resources and were absolutely desperate for processing power on a massive scale. And, in a stroke of absolute genius, priced their specialized AI chips at an enormous premium to anything Nvidia had ever sold before, with prices in the tens of thousands of dollars rather than just hundreds of dollars. Being the only provider of such products, Nvidia, after nearly 30 years, was in a position to price unique premium product into a market of the wealthiest commercial customers.
The AI boom, NVidia’s decades of chip design expertise and their absolutely genius move to price their AI chips well above anything they had ever sold before, catapulted Nvidia from not even being among the top 200 companies in the S&P500 to being the largest company in the US by market capitalization, with a value now exceeding $5 trillion.
Market Update
On Monday Treasury Secretary Bessent announced new additional sanctions to economically isolate Iran. Energy markets took the news in stride, causing crude oil prices to drop. Falling chipmaker stocks pulled down both the S&P 500 0.3% and the NASDAQ 0.8%.
Tuesday, tech stocks rebounded from Monday’s dip, lifting the NASDAQ up 0.7% and the S&P 500 by 0.3%, however the Conference Board reported a sharper-than-expected decline in consumer confidence. The news of the day was an earnings miss and lowered full-year profit outlook from Dick’s Sporting Goods that sent the stock down over 30%.
It was a fairly flat trading session on Wednesday. Economic data included the July Personal Consumption Expenditures (PCE) index—the Fed’s preferred inflation gauge – that met expectations at 3.3% year-over-year, still far above the Fed’s 2% target. After the close of trading, Nvidia announced earnings that crushed Q2 expectations, forecasting a massive 70% revenue growth for fiscal year 2028. The chipmaker also announced an expanded cloud partnership with Amazon AWS to deploy 2 million GPUs. Salesforce and CrowdStrike also reported strong earnings beats after-hours.
Thursday, tech stocks surged on the back of strong earnings driving the NASDAQ up 0.8% and pushing the S&P 500 back toward its all-time high. Notably, tech was the only S&P sector in the green on the day, but was strong enough to hold the broader indexes all in positive territory.
Friday brought Federal Reserve Chairman Kevin Warsh’s debut speech at the Jackson Hole symposium that where he indicated rate increases may be necessary. Initial reaction to his speech was positive but traders soon sold into the strength as they watch the yield on the 10 year treasury note rip 1.1% higher over, settling above 4.7% near the top of its recent range. At Friday’s close, the S&P500 fell a modest 0.25%, the NASDAQ was down 0.5% and the Russell 2000 closed down 1.3% on rate fears.
For the week the S&P500 and NASDAQ closed modestly higher with gains of 0.48% and 0.85%, respectively while the Russell 2000 small cap index fell 1.42%.
Warm wishes and until next week.