The Financial times Lex with some fun facts on NVIDIA stock market dominance and what is much different about it compared to former market darling Cisco Nvidia’s fortunes increasingly drive everyone else’s.

At $3.6tn, the company is the world’s biggest by market capitalisation, and makes up 7️⃣% of the S&P 500 index. Back in 2000 when Cisco briefly became the planet’s most valuable company, its weighting was less than 4️⃣% of the S&P.

As of Wednesday, Nvidia’s stock accounts for 2️⃣4️⃣% of the index’s gains this year.

The result is that when Nvidia does well, animal spirits 🦍 rise across the market. Bank of America analysts had calculated this week that investors were expecting a 1% index move in response to Nvidia’s earnings — greater than the shift they expect from US inflation data later this month.

In the short term, Nvidia has the enviable benefits of both scale and scarcity.

Supply constraints keep prices high, and the company says demand for its new Blackwell chips will exceed its expectations of 'several billion dollars' in the current quarter.

💸 Meanwhile, governments from Saudi Arabia to Denmark are seeking to build their own state-backed artificial intelligence initiatives, so while Silicon Valley depends on Nvidia, the reverse is becoming less true.

That suggests the virtuous circle can continue. Whether that justifies a valuation of 3️⃣4️⃣ times forward earnings is up for grabs. Cisco stock, after a moment on top of the world, plunged during the dotcom crash, and never recovered.

While Nvidia’s customers are paying hand over fist for chips driven by the promise of AI, it remains to be seen whether their customers — and their customers’ customers — will pay up for the resulting services too.💡

Nvidia has two things in its favour. First, its valuation is far behind the 1️⃣3️⃣0️⃣ times earnings Cisco enjoyed in 2000. Second, Huang has the benefit of hindsight and lavish profitability. Cisco’s earnings were 2️⃣0️⃣% of its sales before the dotcom crash; Nvidia’s are nearly 6️⃣0️⃣%.

Spend that wisely, and his company will move the market for some time to come."( Opinions are my own. Not investment advice. Do your own research. )