Cramer explains why Nvidia’s ballooning market cap has its skeptics
CNBC’s Jim Cramer on Wednesday reviewed the rise of several market-leading giants. He suggested Nvidia could soon surpass Microsoft‘s market capitalization but explained why some on Wall Street are suspicious of the artificial intelligence darling’s swift rise to the top.
“Somehow, to so many, it just doesn’t seem right that a company they rarely interact with could be this big. To me? It’s as right as when Apple dethroned Exxon,” he said. “I say all that happened is that Nvidia, at the far turn, was nowhere to be seen, but as we got to the stretch, it made its move. It shocked us.”
He attributed some investor suspicions to consumers’ unfamiliarity with Nvidia’s products and what exactly the company does. Much of the chipmaker’s fame is derived from the enterprise sector, or with “hard-core gamers” on the consumer side, he said.
Cramer noted that investors are comfortable with companies that can be more easily identified with the zeitgeist. For example, Apple’s iPhone is ubiquitous, as is Microsoft Windows, while Amazon is a consumer economy giant and children are familiar with Alphabet‘s Google. He also noted that Berkshire Hathaway‘s Warren Buffett is perhaps the greatest and most well-known name in finance.
At around $3.2 trillion, Microsoft is the biggest company on the market, followed by Apple at about $2.9 trillion. Nvidia is currently at roughly $2.8 trillion.
“Is a photo finish in the cards? No. Because, in the end, the race is eternal,” he said. “And for all we know Nvidia, not Apple, not Microsoft, is Secretariat, the greatest of them all.”
Nvidia declined to comment.
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