Why Many Consider This Tech Giant The World's 'Most Important Stock'

While artificial intelligence has existed in some fashion for some time now, the AI boom of recent years has made the AI hype machine louder than ever today. AI applications like ChatGPT, Gemini, Copilot, and Claude are seemingly everywhere in 2024. And Nvidia (NASDAQ: NVDA) leads the pack as the provider of the technology that powers this intelligence.

Nvidia makes advanced computing technology. The company brought the graphics processing unit (GPU) into the world in 1999, and it's responsible for manufacturing the chips behind the latest in AI innovation. In October 2024, Nvidia regained its $3.19 trillion market capitalization to overtake Microsoft as the second-most valuable company in the world, trailing only Apple (at $3.4 trillion), as reported by Forbes. At $3.19 trillion, Nvidia is worth more than eight times its valuation in 2022. In 2023, it was the best-performing stock of the year, and its continued ascent is a big reason why it's been called the world's "most important stock."

The California-based company is far from new on the scene. Nvidia was founded during a Denny's brainstorm session in 1993, and Nvidia's IPO debuted on January 22, 1999, at $12 a share. (In fact, you may already own Nvidia stock and not even know it.) After introducing its GPU technology in 1999, Nvidia's graphics processing made advanced computing possible, revolutionizing gaming as gamers knew it.

These graphics cards continued to advance, and Nvidia's role now in the AI revolution is why for many, it's the most important company (and consequently, for investors, the most important stock). In 2019, for example, Microsoft partnered with OpenAI to further develop Microsoft's "new Azure AI supercomputing technologies;" the project's infrastructure was built using thousands of networked Nvidia GPUs.

This is just one example, though, of how tech companies today are relying on Nvidia chips to develop and scale increasingly powerful AI products, and put their money where their mouth is when it comes to the sky-high promises behind AI capabilities across industries. Given this, it's not a stretch to say that without Nvidia, much of this innovation wouldn't be possible. Nvidia officially shifted its focus from graphics to AI in 2023.

Clearly, Nvidia is far from a humble chipmaker. Microsoft, Google (Alphabet), Amazon, OpenAI, Meta Platforms, and Tesla are some of the companies that rely on Nvidia's technology for their own developments and applications. Of course, the meteoric rise of Nvidia stock prices (as well as any dips) have volatility junkies salivating. But Nvidia's client pedigree and those clients' products have investors watching the company's market performance like a hawk. Nvidia can be considered the canary in the coal mine for all AI investment opportunities.

"It's the most important stock in the world right now," Eric Jackson, of EMJ Capital, told CNBC's "Closing Bell" prior to Nvidia's Q2 earnings report, adding, "If they lay an egg, it would be a major problem for the whole market." This said, Sevens Report Research's Tom Essaye told Barron's that this importance also derives some power from hype: "Nvidia is the most important stock because people have decided it's the most important stock. It's not structurally the most important stock in the market — its business focus is very, very slim. They just happen to be the tip of the spear of what people are convinced will be the next tech revolution."

Artificial intelligence is experiencing its spring, its boom, and its reckoning with Asimov's Laws of Robotics. But while some are fervently forecasting Nvidia's future a year from now with dollar signs in their eyes, opinions are split on the promises the AI industry has made bearing profitable fruit any time in the near future.