Nvidia's market cap reaches $4 trillion, larger than all of Germany’s stock market

Nvidia crossed the $4 trillion market capitalization mark this week, becoming the most valuable publicly traded company in the world. Its staggering rise has been fueled by insatiable demand for its AI chips, which are critical to powering the data centers that run large language models (LLMs) and other generative AI applications. Incredibly, Nvidia is now worth more than the entire German stock market, despite Germany being the fourth-largest economy in the world. This milestone underscores the growing dominance of a handful of U.S. tech firms at the center of the AI boom. As investors continue to pile into the trade, Nvidia’s ascent is both a symbol of technological transformation and a reminder of the risks tied to extreme market concentration.

• Another way to contextualize the size of Nvidia, is that its market cap now represents 3.7% of GLOBAL GDP
• Generative AI has the same potential as completely life-changing general technology, similar to the printing press, railroads, and the internet
• Nvidia continues to be the pick-and-shovel provider to enable this technology
• In the long term, competitors will almost surely take share. For now, Nvidia’s moat seems to continue to hold
• It is remarkable to see one company able to generate such tremendous value, and a testament to the entrepreneurial and innovative nature of the US economy

Risk-on environment again

The stock market continued its march to all-time highs this week, with major indexes brushing aside trade tensions and geopolitical uncertainty. Investors are embracing a “risk-on” mood, evident not just in equities but also in tightening credit spreads in high-yield bonds and renewed interest in speculative assets. Crypto markets have surged alongside traditional risk assets, with Bitcoin and Ethereum both posting double-digit gains in recent weeks. Oil prices are creeping higher, but haven’t dampened enthusiasm as economic data continues to point toward a soft landing. All told, markets appear to be pricing in a Goldilocks scenario; resilient growth, cooling inflation, and no near-term shocks from the Fed.

• The markets have completely shrugged off the Trump tariff scare from early April
• The most likely reason for the latest move higher is fiscal deficit spending, which will continue as part of the Big Beautiful Bill
• Deficit spending at the federal level is highly stimulative to the economy and hence positive for stocks and other risk assets
• The same cannot be said however, for other assets, most notably the US dollar and fixed income

Trump ramps up tariff threats, stocks shrug

This week, President Trump announced sweeping new tariffs that rattled global trade watchers. Starting August 1, a 35% tariff will apply to all Canadian imports, while Brazil will face 50% tariffs on key exports including beef, soybeans, and metals. Trump framed the move as necessary to protect American workers and reassert U.S. economic dominance, while also hinting at possible 15–20% blanket tariffs on other trading partners in the future. The announcements sparked immediate currency reactions—the Canadian dollar and Brazilian real both slid, but equity markets remained largely unfazed. The aggressive tariff posture marks a sharp return to protectionist rhetoric and could complicate international trade dynamics if implemented.

• After the initial shock announcement of broad-based and outsized tariffs in early April, Trump pulled back, allowing markets to recover from their steep selloff
• With renewed announcements this week, it is interesting to note that markets have not reacted poorly
• It seems the current narrative is that tariffs will work themselves out, and any headwinds to the economy will be offset by growth driven by deficit spending
• While it is too soon to tell if this is how things eventually work out, we will begin to get a better understanding next week as companies begin to report earnings
• All attention will be on results since tariffs were announced, and importantly, what guidance companies give for the remainder of the year

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