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If the 2023 stock market had an MVP, it would have to be Nvidia (NASDAQ: NVDA).
The chip maker and inventor of the graphics processing unit (GPU) has been the biggest winner in the generative artificial intelligence (AI) gold rush to date by far. Its revenue and profits have soared this year, and the stock has more than tripled year to date through Dec. 20. Along the way, the stock crossed the $1 trillion market cap, adding roughly $700 billion in market value and making it just one of five U.S. companies in that club.
The other four companies are Apple, Microsoft, Amazon, and Alphabet. Together with Meta Platforms and Tesla, they’ve come to be known as the “Magnificent Seven,” which has replaced FAANG stocks as shorthand for big tech stocks. Together they represent roughly $12 trillion in market cap, and the group has delivered monster returns this year, with each one outperforming the S&P 500 and the Nasdaq, as you can see from the chart below.
AAPL Chart
Why Nvidia was the most magnificent stock of 2023
Nvidia started 2023 still reeling from the cryptocurrency crash in 2022, as demand for the company’s chips had spiked during the crypto mining boom in 2021.
Early in 2023, however, Nvidia emerged as a potential winner from the new generative AI technology revealed by the launch of OpenAI’s ChatGPT, and Nvidia has not disappointed.
As 2023 draws to a close, the chip maker has capitalized on the generative AI boom in a way that no other company has, and it has the numbers to show it. In its third quarter, revenue tripled from a year ago to $18.12 billion, and its margins expanded significantly, with generally accepted accounting principles (GAAP) earnings per share jumping more than 12 times to $3.71. On a GAAP basis, its profit margin was 51% in the quarter, and the company expects an even bigger fourth quarter, targeting revenue of $20 billion and a modestly higher gross margin.
Image source: Nvidia.
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