- On 29 October Nvidia became the first listed company to reach a value of 5 trillion dollars.
- That same day the Federal Reserve cut rates again, for the second time this year.
- Market concentration in a few AI companies is historic: it helps to know the real exposure of a portfolio.
On 29 October 2025, Nvidia became the first listed company to reach a value of 5 trillion dollars. It is a figure that reflects the force with which the market was betting on artificial intelligence and that puts the company on a scale hard to compare with any other. To put it in perspective, it is worth remembering that the value of a listed company is a market estimate, not a fixed figure. That same day, the Federal Reserve cut interest rates again, for the second time this year.
These are two pieces of news that, together, illustrate the moment: ever cheaper money and growing enthusiasm for technology. When they coincide, the share prices of growth companies tend to rise strongly, and the risk that expectations run ahead of reality also grows. Understanding that dynamic helps one not to be carried along by the inertia of headlines. No record guarantees what will happen afterwards, either downwards or upwards.
A record in value
A market value of 5 trillion dollars had no equivalent: no other listed company had reached it, and the figure measured the market’s confidence that demand for artificial intelligence would keep growing.
The value of a listed company, its market capitalisation, is the result of multiplying the share price by the number of shares. It is not what someone would receive by selling it, nor what the company earns, but what the market as a whole estimates it to be worth at that moment. A record in value reflects expectations, and expectations can change quickly. A quarterly result slightly below expectations, a new competitor or a regulatory change can alter that estimate considerably.
A second Fed cut
The Federal Reserve, with its second cut of the year, supplied the other ingredient. Cheaper money and enthusiasm for technology coincided, and both factors tend to push up the valuations of growth companies.
Lower rates reduce the present value of the future profits companies are expected to earn, and so benefit especially those that promise to grow much later on. It is a well-known mechanism: when money is cheap, investors tolerate paying more for distant growth. If rates change course, the effect can reverse. It is another reason not to base a financial plan on a single hypothesis about how rates will behave.
Market concentration
Market concentration in a few AI companies was reaching historic levels. Reviewing how much a portfolio depends on a single sector is a healthy exercise at any time, and especially when one of them weighs so much in the indices: those who invest in index funds may have more exposure than they think.
A fund that replicates a large-cap index gives more weight to the largest companies, so its performance depends more and more on a few names. Knowing the real make-up of the funds one holds, without falling into alarmism, makes it possible to decide whether that concentration is acceptable or whether to offset it with other positions. An annual review, with an adviser, is usually enough to keep this aspect under control. This note does not recommend buying or selling any security. It is simply a matter of knowing what you hold and why.
Knowing what you hold is the first step to deciding what to keep.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
