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July 9, 2025

NVDA Crosses $4 Trillion as the AI Revolution Powers Forward

The world’s most valuable company just made history again.

Shares of NVIDIA (NVDA) reached an all-time high in mid-day trading today and crossed $4 trillion in market cap—becoming the first company ever to reach that milestone.

NVDA’s success represents an impressive comeback after significant moves to the downside earlier in the year. It’s also a major vote of confidence in the market as a whole and the new administration.

NVDA is the market leader in AI, and AI is now the key pillar of growth for the American economy. Positioning the U.S. for dominance in AI is also a top strategic priority for the White House.

It was just a few months ago that headlines were filled with panic.

In late January, the focus was on DeepSeek, the Chinese AI start-up. The big concern at the time was that AI models were going to become much more efficient in their use of Graphic Processing Units (GPUs).

As the market leader, NVDA, skeptics claimed, was poised to see a collapse in sales.

Then came April.

Liberation Day tariffs sparked a severe sell-off over fears of a trade war with China. NVDA shares tumbled again, along with most stocks.

NVDA’s comeback is a loud and clear signal of investor confidence in the AI revolution. And it’s happening in no small part because of powerful political support for the AI industry.

Under the Trump administration, we are seeing a clear commitment to AI as the next frontier for U.S. economic growth. This includes, most recently, key provisions of the One Big Beautiful Bill Act.

A stock like NVDA is an AI pure play, but the AI growth and productivity wave extends across the economy.

As the S&P 500 and the NASDAQ Composite continue to mark new highs, we remain optimistic about the opportunities ahead across multiple sectors.

NVDA, S&P 500, NASDAQ

(Total Return - Year to Date)

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What the market got wrong

As we noted back in January (China’s DeepSeek Rattles Markets: Deep Trouble or Opportunity?), efficiency gains in AI by players like DeepSeek were to be expected.

The fear at the time was that it would lead to lower demand for AI chips and related equipment.

The counterargument, which we found persuasive, was that greater efficiencies in AI would simply translate into more demand for AI… a phenomenon Microsoft (MSFT) CEO Satya Nadella correctly identified at the time with Jevons Paradox.

Notwithstanding investor concerns earlier this year, demand growth for NVDA GPUs and other products and services across the AI supply chain has been strong in recent months.

Meanwhile, markets are warming to the administration’s trade strategy, or at least getting more comfortable with it and the ebb and flow of negotiations.

Tariffs appear to be raising substantial revenue for the federal government at the moment—without any real evidence of economic disruption.

The Trump administration continues to make progress on a trade deal with China. It has also worked to promote the interests of American AI players in other key regions around the world, most notably the Middle East, which we described in late May (Optimism is Back… and For Good Reason).

OBBBA and AI

Within the recently passed One Big Beautiful Bill Act (OBBBA), there are key provisions that are actually quite helpful to the AI sector.

While technical in nature, and certainly not as headline-grabbing as the feud between Donald Trump and Elon Musk, from a financial perspective, they are significant.

These include permanent reinstatement of 100% bonus depreciation for qualified property. Bonus depreciation was otherwise going to be phased-down to 40%.

Companies can now deduct the entire cost of purchasing new or used GPUs from their taxable income in the year of purchase rather than spreading it out over a multi-year period.

Other tweaks to the tax code also incentivize greater investment in AI. For example, business interest can now be expensed using a more favorable formula, under Section 163(j).

Additionally, the OBBBA restores immediate expensing of domestic Research and Development (R&D) costs. GPUs are the primary hardware engine for R&D in many areas.

Committed to AI

The Trump administration, under the leadership of AI and Crypto Czar David Sacks along with other key players, like Vice President JD Vance, is keenly aware of the importance of AI-related growth to the U.S. economy now.

Given the vast energy demands of AI data centers, this extends to expanding and strengthening America’s energy infrastructure.

Meeting the needs of artificial intelligence was specifically identified as a key objective of the President’s National Energy Dominance Council, established in mid-February.  

America is blessed with an abundance of natural resources and is a leader in energy technologies and innovation that are critical to the economic prosperity and national security of the American people, as well as our partners and allies.  We must expand all forms of reliable and affordable energy production to drive down inflation, grow our economy, create good-paying jobs, reestablish American leadership in manufacturing, lead the world in artificial intelligence, and restore peace through strength by wielding our commercial and diplomatic levers to end wars across the world. - Executive Order (2/14/2025)  

The first half of 2025 represented a rocky start for markets and AI-related investments in particular.

But we now have abundant evidence of strong private and public sector support for AI businesses. This support is driving investment and productivity gains across the economy—and provides a real foundation for the ongoing stock market rally.

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