At the peak of Japan’s 1980s property boom, the land beneath Tokyo’s Imperial Palace was said to be worth more than the entire state of California.
The comparison once seemed absurd: several square kilometers of palace gardens priced as high as America’s most populous state. Yet that estimate captured more than arithmetic – it served as a measure of how far belief can stretch when wealth, optimism, and capital converge on one asset.
Four decades later, the stage has shifted from Tokyo real estate to Silicon Valley semiconductors, but the proportions remain familiar. Nvidia, headquartered in California, now has a market capitalization of nearly $5 trillion, surpassing Japan’s $4.4 trillion in annual output. A company of 30,000 is valued above the output of 124 million Japanese citizens and now rivals Germany, the world’s third largest economy. A simple but arresting image in this week’s chart – one line for a company crossing another for a nation.
The scale defies intuition. Japan’s GDP reflects factories, services and households while Nvidia’s valuation reflects the market’s view of its future profits. Moments like this, when numbers collapse the boundary between metaphor and reality, are rare in markets.
The historical parallel to the late 1980s helps. Back then, investors believed Japan’s land value would rise forever. By that reckoning, the Imperial Palace was said to be worth as much as California. The concept became shorthand for speculative confidence. Today, markets suggest something similar about the companies developing artificial intelligence – promising a new era of productivity, profitability, and power.
We have followed Nvidia’s ascent now through several editions of Between the Lines – including the early surge in AI valuations in DeepSeek and Destroy to its pairing with the cryptocurrency market in Paradigm Shift or Bubble? Nvidia and Crypto at $8 Trillion. Its rise is impossible to ignore and continues to document a phenomenon still unfolding.
On one side, the bull case is strong: Nvidia designs chips that power nearly every large AI system on Earth. Its revenues and margins have expanded at rates unseen in modern industry. The valuation might be less mania than repricing – a recognition that computation, not commodities, now anchors global growth.
On the other side is the familiar pattern of concentration that has marked every cycle of excess. A decade of cheap capital and passive flows has funneled wealth into a few megacap stocks, creating feedback loops that reward size itself. The result is a financial landscape where a few mountains rise above entire continents.
That is what makes this chart worth studying: not proof of irrationality or validation of perfection but evidence of magnitude – a reminder of how finance can compress the work of millions into a ticker symbol. Perhaps Nvidia will earn the future now embedded in its price. Or perhaps, like Japan’s palace lawns, the valuation will one day stand as an artifact of belief pushed to its limit.
As Between the Lines marks its 100th edition, the theme endures: The chart doesn’t tell us what to think – it shows how much investors are willing to believe.
Between the Lines is a weekly blog by DoubleLine Portfolio Managers Sam Garza, Joseph Mezyk and Quant Analysts Fei He, CFA and Sunyu Wang that breaks down topical macro and market issues. For questions or suggestions please e-mail us at betweenthelines@doubleline.com. The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of DoubleLine Capital LP, its affiliates or employees.
