Despite all the tech companies in the prestigious group posting impressive gains, the two disruptors of the lot outshone the rest.
For those unfamiliar with the "Magnificent 7", it refers to a group of tech giants that have defined the modern stock market era - Nvidia, Tesla, Amazon, Apple, Microsoft, Meta, and Alphabet. These companies represent the pinnacle of innovation, technological advancement, and market capitalization. While all seven have delivered impressive returns over the years, Nvidia and Tesla have outshone their peers with astronomical growth that redefines expectations for the tech sector.
Nvidia and Tesla’s rise to the trillion-dollar market capitalization club highlights their extraordinary growth trajectories. Nvidia, which achieved the $3T market cap in June currently sits at $3.36 trillion - making it the world’s second most valuable public company, just behind Apple (Figure 1). This growth was largely driven by the explosion of AI applications and demand for high-performance GPUs starting in 2022.
Meanwhile, Tesla closed today with a market cap of $1.34 trillion, solidifying its position as a leader in the EV and clean energy sectors. The company’s success stemmed from its ability to scale production through Gigafactories and dominate the EV market while expanding its energy storage and solar solutions. Both companies’ meteoric growth underscores their roles as innovators, achieving valuation milestones by aligning with transformative trends in technology and sustainability.
Figure 1
While both Tesla and Nvidia have seen massive growth in the long term, their paths to success have been quite different, as evident in the charts above. Nvidia has experienced a nearly parabolic rise since 2022, while Tesla has been in a bearish consolidation phase since 2021, with much of its recent gains coming after Trump’s victory in the latest U.S. elections.
Few investors have benefited more from the post-election rally in U.S. stocks than Elon Musk and other Tesla shareholders. The stock has climbed 69% since Trump’s re-election, adding over $556 billion in market value, and has nearly doubled since Tesla’s third-quarter results in October. The highlight (for now) came yesterday when Tesla hit a record high for the first time since November 2021.
Comparing the performance of the two companies since Tesla’s IPO in 2010, they have emerged as unparalleled leaders among the so-called "Magnificent 7" tech giants (Figure 2). Since June 2010, Nvidia and Tesla have posted astronomical total returns of 54,633% and 37,380%, respectively. These figures dwarf the impressive but comparatively modest returns of other leading tech companies like Amazon (3,809%), Apple (2,950%), and Microsoft (2,331%), with Meta and Alphabet further behind at 1,570% and 1,560% respectively.
Figure 2
Nvidia: Dominating the AI Revolution
Nvidia’s unrivaled growth is largely attributed to its role as the backbone of the AI industry. The company’s GPUs are essential for training large AI models, which have become increasingly critical in industries ranging from healthcare to finance. While Nvidia experienced consistent growth over the last decade, the majority of its gains occurred since 2022, driven by the explosive adoption of generative AI and the rapid scaling of cloud infrastructure.
Nvidia’s early and aggressive investment in AI hardware positioned it as a key player in this transformative technology. Moreover, its entrance into software—through platforms like CUDA—created an ecosystem that further entrenched its dominance. Nvidia's market capitalization skyrocketed to as high as $3.62 trillion, highlighting its meteoric rise.
Tesla: Redefining the Automotive Industry
Tesla’s growth stems from its ability to redefine what a car company can be. Beyond selling EVs, Tesla has positioned itself as a tech company, integrating software updates, over-the-air enhancements, and autonomous driving features. Additionally, Tesla’s Gigafactories revolutionized battery production, driving down costs and increasing accessibility.
Tesla’s ecosystem—spanning solar panels, energy storage, and charging networks—has solidified its role as a leader in renewable energy. Furthermore, Tesla is all set to benefit from its strategic alignment with the incoming Trump administration, leveraging regulatory and tax incentives to expand its operations in the U.S. and secure a favorable business environment for its renewable energy and EV initiatives.
Looking Ahead
Despite their success, both companies face challenges that could impact future growth. Nvidia’s reliance on cyclical industries like gaming and semiconductors makes it vulnerable to market downturns, while Tesla faces increasing competition from traditional automakers and EV startups. However, their continued focus on innovation and investment in emerging technologies suggests they are well-positioned to navigate these challenges. Originally published at Substack.
