Nvidia’s AI bet nears trillion dollars. After its outstanding revenue projection, Nvidia Corp (NVDA.O) rose 24% on Thursday, one of the biggest one-day rises for a U.S. stock. However, Wall Street has yet to price in A.I.’s game-changing potential.
The stock more than doubled this year, raising the chip designer’s market cap by $184 billion to roughly $939 billion.
Nvidia is twice as large as TSMC (2330. T.W.), Taiwan’s second-largest chipmaker. It trails only trillion-dollar businesses Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O), Microsoft Corp (MSFT.O), and Amazon.com Inc (AMZN.O) in the U.S.
Stock markets from Japan to Europe rallied on-chip and AI-focused corporate earnings. Big Tech businesses other than Amazon closed between 0.6% and 3.8% higher in the U.S., while AMD.O rose 11%.
As Nvidia dominates the chip market for powering ChatGPT and other A.I. services, 27 analysts raised their price targets on the stock.
The average price goal has increased this year. Elazar Advisors’ $644.80 price estimate puts Nvidia’s valuation at $1.59 trillion, comparable to Alphabet’s.
“In the 15+ years we have been doing this job, we have never seen a guide like the one Nvidia just put up with the second-quarter outlook that was by all accounts cosmological, and which annihilated expectations,” Bernstein analyst Stacy Rasgon said.
On Wednesday, Nvidia, the fifth-most valuable U.S. firm, forecasted quarterly sales over 50% above the average Wall Street estimate. It said it would have extra A.I. chips in the second half to fulfill demand.
As generative A.I. is applied to every product and service, CEO Jensen Huang stated $1 trillion worth of data center equipment must be replaced with A.I. chips.
Big Tech corporations have turned to A.I. to boost demand for digital advertising and cloud computing, their profit engines, in a poor economy.
Analysts said Nvidia’s results suggest the generative A.I. surge could be the next significant growth driver.
We only see the iceberg’s top. “This could be another technological inflection point, like the internal combustion engine or the internet,” said Derren Nathan, head of stock analysis at Hargreaves Lansdown.
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