Due to a favorable forecast and AI adoption, Nvidia has seen explosive growth and could soon hit the trillion-dollar market cap.
Nvidia Corporation (NASDAQ: NVDA) is fast approaching the trillion-dollar market cap due to its explosive stock surge. On Thursday, the chip maker’s shares jumped 26% following a robust earnings outlook and increased production scale.
Nvidia’s market valuation sits at $950 billion, which is almost $200 million higher than it was at Wednesday’s close. The Santa Clara-based software and fabless company’s market capitalization is now twice as large as its Taiwanese rival – TSMC.
Several analysts and observers believe that Nvidia could soon become a trillion-dollar company. Currently, other companies with at least $1 trillion in valuation include Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), and Amazon (NASDAQ: AMZN).
Needham analyst Rajvindra Gill commented on Nvidia potentially becoming the fifth publicly traded US company to attain the trillion-dollar market cap. Gill said Needham, in 2021, had suggested that Nvidia would be the first semiconductor company to hit $1 trillion. He still believes that Nvidia can hit that valuation regardless of the highs and lows the company has experienced over the last few years.
Surge in Demand for Nvidia Products Propelled Stock to Trillion-Dollar-Market-Cap Status
Nvidia’s growth trajectory to $1 trillion could culminate in a matter of days after the company raised its quarterly sales guidance. The company is experiencing surging demand due to accelerated AI adoption and an $11 billion sales forecast for fiscal Q2. In a statement from earlier this week, Nvidia chief executive officer Jensen Huang noted:
“The computer industry is going through two simultaneous transitions – accelerated computing and generative AI. Our entire data center family of products – H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand, and BlueField-3 DPU – is in production. We are significantly increasing our supply to meet surging demand for them.”
This development has hiked the price of Nvidia’s shares and stoked a rally in other AI-exposed stocks. For instance, yesterday, tech-rooted companies, including C3.ai Inc (NYSE: AI), Palantir Technologies (NYSE: PLTR), Microsoft, Alphabet, and Advanced Micro Devices (NASDAQ: AMD) all rose substantially in premarket trade.
With Nvidia’s stock up more than 108% year-to-date and 50% higher-than-expected sales guidance, Gill spoke of the company’s favorable macroeconomic indices. Gill said Nvidia’s customers are racing to meet generative AI-based and large language model (LLM) demands. Meeting these demands will definitely augur well for Nvidia, its stock, and its valuation.
Bank of America (NYSE: BAC) senior analyst Vivek Arya described Nvidia’s latest quarterly sales forecast as the company’s most significant. Arya and other analysts have now hiked their price targets on NVDA. One analyst favored a staggering 64% upside on Wednesday.
Some analysts opine that Nvidia’s short-term explosive growth indicates the potential of generative AI as the next big growth driver. However, others remain reserved and wonder if the bullish AI phase would stand the test of time.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.