AI boom powers new-school Nvidia and old-school Caterpillar to new heights
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Illustration: Maura Kearns/Axios
What's good for a new-school company can also be good for an old-school one.
The big picture: Nvidia passed $5 trillion in value Wednesday, while Caterpillar's stock soared. The burgeoning AI economy is fueling insatiable demand for the modern form of picks and shovels — the types of AI chips that Nvidia designs — and for the actual picks and shovels needed to build that new capacity.
- Nvidia's stock rose 3% Wednesday, propelling it to become the first company ever to pass $5 trillion in market cap, as investors welcomed CEO Jensen Huang's revelation that it has booked $500 billion in sales for its two newest chips through 2026.
- At the same time, Caterpillar reported surging orders for construction equipment needed to build AI data centers.
Nvidia added another $1 trillion in value in just over 100 days, illustrating the feverish nature of the global frenzy for AI.
- Not only do Nvidia's chips power that historical shift — the company, as an investor, increasingly has a piece of several other major players in the space, too, Axios' Ben Berkowitz reports.
Stunning stat: At $5 trillion, Nvidia is now worth about $1 trillion more than the next-closest company, Microsoft.
- Or put another way: Nvidia is worth roughly double JPMorgan Chase, Walmart, Exxon Mobil, and Johnson & Johnson — combined.
- "They've just defied gravity," Melissa Otto, head of research at S&P Global Visible Alpha, tells Axios.
Zoom in: The chips that Nvidia sells are powering the data centers that Caterpillar's equipment is helping to build.
- Caterpillar CEO Joe Creed said on an earnings call today that sales of equipment in the company's power generation segment soared 33%, "primarily due to demand for reciprocating engines for data center applications."
- The manufacturing and construction boom stemming from the AI surge amounts to a "massive reindustrialization of the U.S.," Otto says.
What we're watching: Are Nvidia shares becoming overinflated?
- Huang himself dismissed chatter of an AI bubble in an appearance Tuesday at the Nvidia GTC event in Washington, D.C.
- S&P's Otto says the company's valuation is not out of whack when considering that demand still exceeds supply of the company's chips: "That's not a bubble. That's just a growing business," she says.
Yes, but: Huang said Tuesday that the AI boom could be hampered by a "severe shortage of labor," citing the need for mechanical engineers, electrical engineers, plumbers, construction workers and other skilled laborers.
- "We need mountains of them," he told reporters. "We've lost a lot of that capability. We have to celebrate them. We have honor them. This is a really terrific job. It's going to pay well."
