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The Psychology of Color in Business

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The Psychology of Color in Business

The Psychology of Color in Business

What do the colors in your company’s branding tell customers?

Today’s infographic, by the Masters in Psychology Guide, is on the psychology of color in business. It analyzes the colors used by major tech startups as well as by prominent consumer brands in their advertising.

Unicorn Colors

Out of the largest 50 unicorns, tech startups that have achieved valuations of $1 billion or more, the most common primary branding color was black or grey. A total of 38% of companies, including stalwarts like Uber, Vice, and WeWork, rely on these hues for their outward appearance.

Blue is well-known as a strong business color, and it is no surprise that 20% of the top 50 unicorns focus on blue as their primary branding color. Dropbox and SpaceX are among the companies that are following in IBM’s “Big Blue” branding path here.

The red end of the spectrum makes up 16% of companies (including Pinterest and Airbnb), with yellow at 12% (including Snapchat), and green at just 6%. A green palette was least used for primary branding by unicorns, with Spotify being a rare exception.

The Psychology of Color in Branding and Ads

It’s not just tech startups that key in on color to help differentiate their brands. Companies, including some of the best-known consumer brands, have focused on color in their branding, advertisements, and communications for years.

Red is a color that allegedly stimulates appetite. That may explain why fast-food restaurants like McDonald’s, KFC, Pizza Hut, Wendy’s, and Popeye’s all heavily use red in their brands.

Black is all about the feeling of sophistication. Some of the largest luxury brands in the world use black as a primary branding color, including Chanel, Michael Kors, Prada, Dior, or Georgio Armani.

Blue is viewed as productive, but not invasive. It has been the color of choice for large corporate brands like IBM, AT&T, and Forbes.

Lastly, green is a symbol of fertility, and pink is chosen for a feminine feel.

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Nvidia Joins the Trillion Dollar Club

America’s biggest chipmaker Nvidia has joined the trillion dollar club as advancements in AI move at lightning speed.

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Nvidia Joins the Trillion Dollar Club

Chipmaker Nvidia is now worth nearly as much as Amazon.

America’s largest semiconductor company has vaulted past the $1 trillion market capitalization mark, a milestone reached by just a handful of companies including Apple, Amazon, and Microsoft. While many of these are household names, Nvidia has only recently gained widespread attention amid the AI boom.

The above graphic compares Nvidia to the seven companies that have reached the trillion dollar club.

Riding the AI Wave

Nvidia’s market cap has more than doubled in 2023 to over $1 trillion.

The company designs semiconductor chips that are made of silicon slices that contain specific patterns. Just like you flip an electrical switch by turning on a light at home, these chips have billions of switches that process complex information simultaneously.

Today, they are integral to many AI functions—from OpenAI’s ChatGPT to image generation. Here’s how Nvidia stands up against companies that have achieved the trillion dollar milestone:

Joined ClubMarket Cap
in trillions
Peak Market Cap
in trillions
AppleAug 2018$2.78$2.94
MicrosoftApr 2019$2.47$2.58
AramcoDec 2019$2.06$2.45
AlphabetJul 2020$1.58$1.98
AmazonApr 2020$1.25$1.88
MetaJun 2021$0.68$1.07
TeslaOct 2021$0.63$1.23
NvidiaMay 2023$1.02$1.02

Note: Market caps as of May 30th, 2023

After posting record sales, the company added $184 billion to its market value in one day. Only two other companies have exceeded this number: Amazon ($191 billion), and Apple ($191 billion).

As Nvidia’s market cap reaches new heights, many are wondering if its explosive growth will continue—or if the AI craze is merely temporary. There are cases to be made on both sides.

Bull Case Scenario

Big tech companies are racing to develop capabilities like OpenAI. These types of generative AI require vastly higher amounts of computing power, especially as they become more sophisticated.

Many tech giants, including Google and Microsoft use Nvidia chips to power their AI operations. Consider how Google plans to use generative AI in six products in the future. Each of these have over 2 billion users.

Nvidia has also launched new products days since its stratospheric rise, spanning from robotics to gaming. Leading the way is the A100, a powerful graphics processing unit (GPU) well-suited for machine learning. Additionally, it announced a new supercomputer platform that Google, Microsoft, and Meta are first in line for. Overall, 65,000 companies globally use the company’s chips for a wide range of functions.

Bear Case Scenario

While extreme investor optimism has launched Nvidia to record highs, how do some of its fundamental valuations stack up to other giants?

As the table below shows, its price to earnings (P/E) ratio is second-only to Amazon, at 214.4. This shows how much a shareholder pays compared to the earnings of a company. Here, the company’s share price is over 200 times its earnings on a per share basis.

P/E RatioNet Profit Margin (Annual)
Apple30.225.3%
Microsoft36.136.7%
Aramco13.526.4%
Alphabet28.221.2%
Amazon294.2-0.5%
Meta33.919.9%
Tesla59.015.4%
Nvidia214.416.19%

Consider how this looks for revenue of Nvidia compared to other big tech names:

For some, Nvidia’s valuation seems unrealistic even in spite of the prospects of AI. While Nvidia has $11 billion in projected revenue for the next quarter, it would still mean significantly higher multiples than its big tech peers. This suggests the company is overvalued at current prices.

Nvidia’s Growth: Will it Last?

This is not the first time Nvidia’s market cap has rocketed up.

During the crypto rally of 2021, its share price skyrocketed over 100% as demand for its GPUs increased. These specialist chips help mine cryptocurrency, and a jump in demand led to a shortage of chips at the time.

As cryptocurrencies lost their lustre, Nvidia’s share price sank over 46% the following year.

By comparison, AI advancements could have more transformative power. Big tech is rushing to partner with Nvidia, potentially reshaping everything from search to advertising.

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