NVIDIA’s market value surpassing cryptocurrencies, Tesla, and Facebook. Are we still in the early stages of the cryptocurrency industry?Is the cryptocurrency industry still in its early stages when NVIDIA's market value surpasses that of cryptocurrencies, Tesla, and Facebook?
On Thursday, Nvidia announced a net profit of $6.2 billion for the second quarter, with total revenue of $13.5 billion, doubling from the same period last year and exceeding analysts’ expectations. The chip manufacturer’s stock price reached $502.
Nvidia’s strong performance this quarter is due to a continuous growth of 141% in its data center division, which produces GPUs for high-performance computing and cloud applications. The revenue from its data center business alone reached a record $10.3 billion.
Ram Ahluwalia, CEO of Lumida Wealth Management, said that the surge in the chip manufacturer’s stock price is a direct result of the expected revenue growth. Cryptocurrencies need to embrace tokenization and other use cases to achieve similar results.
Nvidia currently ranks sixth among listed companies, surpassing Tesla by Elon Musk or Facebook by Mark Zuckerberg. At the same time, CoinGecko tracks the market valuation of over 10,000 cryptocurrencies at $1.09 trillion. This means that Nvidia’s market value has also surpassed the overall market value of cryptocurrencies.
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Mark Connors, Head of Research at 3iQ, said, “Nvidia’s stock price illustrates the fact that they are the leader in producing artificial intelligence hardware. Because of its association with cryptocurrencies, this indicates that we are still in the early stages.”
Jensen Huang, founder and CEO of Nvidia, said in a statement on Wednesday, “Global enterprises are transitioning from general-purpose computing to accelerated computing and generative artificial intelligence. A new era of computing has begun.”
Last year, as token prices fell, several companies closed down during the crypto winter. After a difficult journey, cryptocurrencies continue to find their footing, and OpenAI’s release of ChatGPT has turned artificial intelligence technology into a popular commodity.
The interface of ChatGPT is simple and user-friendly, making it as easy for people to use AI technology as typing in a chat box. Connors pointed out that this contrasts sharply with the steep learning curves of search engines like Google and cryptocurrencies. AI is surpassing them for both search engines like Google and cryptocurrencies.
Will Ethereum become a verb like Google? Connors said, “Not in the next year or two.”
“The rise in Nvidia’s price is justified and has to do with earnings, and tokenization can generate income for digital assets or allow investors to participate more,” said Ram Ahluwalia, CEO of Lumida Wealth Management. “The more cryptocurrencies embrace tokenization and bring real-world assets onto the blockchain, the better the price trajectory of digital assets.”
Ahluwalia added that there is not necessarily a competition between cryptocurrencies and Nvidia, and investment opportunities in the field of artificial intelligence will not weaken the value of cryptocurrencies. However, securities laws need to be adjusted in order for the industry to catch up.
“The most exciting opportunities in tokenization will lead to violations of securities laws,” he said. “To truly unleash token economics and allow you to gain value and price appreciation, it is necessary to update securities laws and have direct dialogue with Congress and the U.S. Securities and Exchange Commission.”
Nvidia’s turnaround came after the cryptocurrency market capitalization crashed last Friday, wiping out $84 billion in cryptocurrency market value. According to CoinGecko data, Bitcoin plummeted 6% to around $26,250 within two hours, while alternative coins like XRP slid 17% to $0.47 during the same period.
As for the reasons behind the cryptocurrency market value decline, reports suggest it is related to Elon Musk’s space exploration company (SLianGuaiceX) selling an undisclosed amount of Bitcoin, as well as macroeconomic concerns sparked by the bankruptcy protection application from Evergrande, one of China’s largest real estate developers.
However, the cryptocurrency market value has already rebounded since hitting a low of $826 million in December last year, shortly after the collapse of cryptocurrency exchange FTX. So far this year, Bitcoin has grown over 50% from around $16,600 in January.
Compared to Nvidia, the best-performing company in the S&P 500 index so far this year, the increase in Bitcoin seems relatively modest. When Nvidia’s stock price reached a new all-time high on Thursday, it had increased over 250% from its January level of $143.
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