Nvidia just became the world's most valuable company... and it makes no sense

Nvidia’s headquarters in California

Yesterday, Nvidia became the world’s most valuable company (by market capitalization). They beat Apple and Microsoft, and are valued at $3.3 trillion.

To put it into context, that's more than the entire GDP of the UK or France!

So I did a bit of research, since I was curious why investors thought putting such a high valuation on this company was a good idea…

Turns out, they're a "fabless" company, they don't produce any of their own chips or graphics processors, almost everything is made by TSMC. Moreover, Apple, ARM, AMD, and many others also don't produce any of their own chips, it's again all outsourced, much of it to TSMC.

So not only does Nvidia not actually PRODUCE any physical products (they're a design and marketing company), but they're almost entirely reliant on a single company based in Taiwan, and Taiwan is under increasing threat of invasion from China.

And this is the company that is worth $3.3 trillion, more than any other company in the world?

Moreover, Nvidia’s total assets as of 2024 are only around $77 billion, which means if something terrible were to happen and the company had to be liquidated, there is no way investors could be made whole.

Can anyone explain the madness in financial markets?

P.S. I looked into what TSMC was valued at, and it’s around $750 billion - 4.5 times less than Nvidia. Go figure.