Nvidia shares soar toward $1 trillion valuation

Nvidia shares – On Thursday, Nvidia experienced an increase of approximately 30% in its market worth, propelling the chip powerhouse’s stocks toward an unprecedented peak, nearly touching a market valuation of $1 trillion.

In the early trading session, the stock of Nvidia surged by approximately 25% to reach $381.76, marking the largest single-day percentage rise for the company since 2016.

Should the gains persist during Thursday’s trading session, Nvidia, the manufacturer of graphics chips, has the potential to outperform Amazon and achieve the highest single-day increase in market capitalization among all U.S. companies. To surpass Amazon’s previous record set on February 4, 2022, Nvidia would need to conclude the day’s trading at $382.82 or above.

In order for Nvidia to achieve a market valuation of $1 trillion, the stock would need to attain a price of $404.86.

Nvidia, whose stocks had already experienced a growth of over 100% this year, projected sales of approximately $11 billion for the current quarter during Wednesday evening. This forecast represents a 64% increase compared to the same period last year and exceeds the expectations of Wall Street analysts, who had anticipated sales of $7.2 billion.

According to Jensen Huang, the CEO of Nvidia, the surge in language-generating tools like OpenAI’s ChatGPT and other artificial intelligence applications is generating a higher need for computational capacity. Analysts assert that Nvidia’s chips play a pivotal role in developing AI tools, and constructing a single AI system can necessitate thousands of Nvidia’s computing engines.

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The positive forecast provided by Nvidia had a positive impact on the stocks of other chip manufacturers and companies utilizing AI tools. In early trading, Advanced Micro Devices and Monolithic Power Systems saw their shares rise by 9.4% and 12.6% respectively. Additionally, Microsoft, an investor in OpenAI, observed a 2.5% increase in their shares.

Wall Street analysts expressed their enthusiasm for Nvidia’s projection, with several affirming that the company has strategically positioned itself as a leader in the emerging implementation of AI tools. Susquehanna analysts remarked that the rapid increase in chip orders due to the adoption of ChatGPT is “difficult to comprehend.”

In their statement, they conveyed that it appears a modern-day gold rush is underway, with Nvidia positioned as the supplier of the essential tools and equipment. They remarked, “Nvidia is effectively selling the necessary picks and shovels.”

According to analysts at Truist, Nvidia’s increase in sales seems to have a lasting nature, with enduring trends overshadowing any temporary growth factors. They asserted that the sustained momentum is overshadowing any transient elements contributing to growth.

Truist analysts expressed their astonishment at the significant level of positive growth potential. In a research note on Thursday, they emphasized that Nvidia holds the position of being the foremost AI company.

JPMorgan analysts reiterated this perspective, stating that Nvidia has established itself as a comprehensive provider of solutions. Meanwhile, analysts at Stifel emphasized that the chip manufacturer occupies a favorable position in terms of capturing a significant portion of the AI infrastructure market. They also highlighted that Nvidia is one of the most advantageous companies to capitalize on the growing prominence of AI.

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Benchmark analysts issued a warning, expressing concerns that the company may encounter difficulties in acquiring sufficient resources to fulfill the rapidly increasing demand. Meanwhile, at Wedbush, analysts commented that Nvidia’s forecast accurately represents the unprecedented levels of AI demand observed in both corporate and consumer sectors.

According to the analysts at Wedbush, the outcomes are anticipated to prompt individuals skeptical of AI to close their short positions on Nvidia as well as other stocks associated with AI.

The analysts affirmed that although there is ongoing competition in the field of AI, it is evident that the AI revolution is here to stay.