NVIDIA's market capitalization reached $2 trillion for the first time. The new record follows the release of a stunning financial report this week and impressive future forecasts amid insatiable market demand for AI chips. NVIDIA is a leader in the field of AI accelerators, which has made it the main beneficiary of the boom in generative artificial intelligence, writes Reuters.
NVIDIA's new capitalization record comes shortly after the chip developer's next impressive revenue forecast for the current quarter. NVIDIA's market value rose $277 billion on Thursday, the largest one-day gain in Wall Street history.
NVIDIA's rapid growth in the past year has prompted market analysts to draw parallels between the artificial intelligence chip supplier and the picks and shovels sellers of 19th-century gold rush miners, as NVIDIA GPUs are used by virtually all of the leading generative AI players, including giants like OpenAI, Microsoft, Meta✴ and Google.
Incredible demand for specialized AI accelerators allowed NVIDIA to increase its capitalization from $1 trillion to $2 trillion in just over eight months, the fastest of its kind among a US company—more than twice as fast as Apple.
“For today's AI technology companies, the leaders in the sector, the key issue is not maintaining demand. The more important challenge for them now is the ability to respond to this ongoing increase in demand,” commented Ipek Ozkardeskaya, market analyst at Swissquote Bank.
On Friday, NVIDIA shares rose 3%, reaching an all-time high of $808 per share, which allowed the chip maker to secure the title of the third most valuable company in the United States. NVIDIA's capitalization reached $2.05 trillion, although at the end of January its market value was $1.52 trillion. After more than tripling last year, the company's shares have risen nearly 60% since the start of 2024. That jump has made the chip designer the fastest-growing company in the S&P 500 in 2024. The latest forecast of a whopping 233% first-quarter revenue growth, beating all market forecasts, has boosted shares of not only NVIDIA, but many other tech companies as well. otherwise related to the development and production of chips.
Despite the rise, NVIDIA shares trade at a forward price-to-earnings ratio of 31, down from 49 a year ago, according to London Stock Exchange data.
“Leading cloud computing companies are planning to increase their capital expenditures related to the development of infrastructure for AI training. It seems that almost all of these expenses will fall into NVIDIA’s pockets,” Reuters quotes an expert from the information and analytical company Morningstar as saying. Current forecasts are for NVIDIA to increase its revenue by a couple billion dollars each quarter during the current fiscal year as chip shipments increase, the analyst added.
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