Nvidia inched closer to $2 trillion market value after the bellwether for artificial intelligence (AI) chip demand once again exceeded Wall Street’s sky-high expectations, re-igniting a global rally in tech stocks.
The chipmaker returned as the third most valuable US company as its shares jumped 15 per cent to a record high of $780 on Thursday, after it forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips.
If the gains hold, Nvidia will add about $230 billion to its market capitalization. That would be the biggest single-session increase in market value in history, eclipsing a $197 billion gain made by Meta at the start of the month.
The chipmaker also gave guidance above expectations, driven by AI spending at its biggest customers, including Microsoft Corp. and Meta. A series of estimate-beating results means the shares have been getting cheaper on a price-to-earnings basis.
The benchmark S&P 500 index briefly hit a fresh record on Thursday after Nvidia’s stellar results and forecast spurred the AI-led rally this year. Nvidia shares have jumped nearly 36 per cent this year to become the top performing S&P 500 stock, while playing a crucial part in the benchmark index climbing record highs in 2024.
If Nvidia hits the $2 trillion mark, it would achieve the milestone at the fastest pace ever by adding $1 trillion in just about nine months. The soaring demand for Nvidia’s chips used by companies rushing to upgrade their AI offerings helped the Silicon Valley firm forecast a massive 233 per cent growth in first-quarter revenue, above market expectations of a 208 per cent rise.
Meanwhile, investors stuck to bets the US Federal Reserve will begin cutting interest rates in June after minutes from the central bank’s latest meeting showed a majority of policymakers were concerned about the risks of easing policy too soon.
Data showed initial jobless claims fell to 201,000 in the week ended February 17 from 213,000 in the previous week, signaling the labor market remained tight. Economists polled by Reuters had estimated 218,000 jobless claims.
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Published: 22 Feb 2024, 09:33 PM IST