NVIDIA

Nvidia is making money at a pace that is hard to believe. Sales grew about 65 percent over the past year, and the company now keeps roughly 63 cents of profit out of every single dollar it brings in. Most businesses are happy with 10 or 15 cents. Nvidia keeps almost two thirds, and that number keeps climbing as it sells more of its newest and most expensive chips.

Nvidia built something rivals cannot easily copy. Nearly all important AI software is written to run on Nvidia chips through its system called CUDA, so switching away would mean starting over from scratch. That lock-in helped push Nvidia's total value past 5 trillion dollars, making it one of the most valuable companies on earth. Even Google, Amazon, and Microsoft, who are building their own chips, still keep buying from Nvidia.

Almost all of Nvidia's money comes from a small group of giant customers like Microsoft, Google, and Amazon, and those same customers are spending billions trying to build their own chips so they need Nvidia less. The 100 billion dollar partnership with the maker of ChatGPT adds more risk, because Nvidia is leaning hard on one company that does not yet turn a profit. If even one major customer pulls back, Nvidia could lose billions in sales almost overnight.

At more than 5 trillion dollars in value, Nvidia is priced for everything going right. The stock also swings roughly twice as hard as the overall market, up and down, so a single disappointing forecast can knock hundreds of billions off its value in a day. China restrictions on chip sales and any cooling of that 65 percent growth rate are the two things most likely to trigger it.