Nvidia shares surged more than 9% on Thursday, following a strong revenue forecast that highlighted the AI-driven boom in chip demand. The semiconductor giant saw a market value increase of around $218 billion, making it the second-largest single-day gain in market capitalization in Wall Street history. Despite high expectations, Nvidia’s impressive results reflected a strong quarter for US tech giants, with AI emerging as a significant growth driver.
According to market analyst Josh Gilbert, large technology companies are increasing their capital expenditures to keep up with the demand for revolutionary technology, benefiting Nvidia the most. The company also announced a 10-for-one stock split and a 150% increase in its quarterly dividend as demand continues to outstrip supply for its high-end chips powering AI applications like ChatGPT by OpenAI.
Nvidia’s market cap gain on Thursday, placing it as the third most valuable company in the world, surpassed Adobe’s total value. The company’s market capitalization of $2.55 trillion is closing in on Apple, the second-largest US company by market value. Microsoft remains the largest company by market value at $3.17 trillion. Nvidia’s shares closed above $1,000, up nearly 110% in 2024 after tripling the previous year.
The gains in Nvidia’s stock offset a broader decline in the stock market, with the S&P 500 falling 0.7% on the day. Nvidia’s results were also supported by Taiwanese chipmaker TSMC’s prediction of 10% annual growth in the global semiconductor industry, excluding memory chips. While US-listed shares of TSMC rose, other AI-focused names like Arm Holdings, Broadcom, Advanced Micro Devices, and Super Micro Computer had mixed reactions to Nvidia’s results.
Analysts praised Nvidia’s executives’ comments about new AI chips and the strong demand expected to continue into the next year. CEO Jensen Huang mentioned the potential for new AI models driving more orders for Nvidia processors. Analysts believe that Nvidia can defend its market share against competition and that current demand for its current chips should alleviate concerns about delays in anticipation of new product transitions.
The stock split announced by Nvidia could also make the company more attractive to retail investors. Approximately 28 out of 58 brokerages raised their price targets for Nvidia, with a median view of $1,200. Nvidia’s trailing 12-month P/E ratio is around 34, lower than AMD’s 38 and higher than Super Micro Computer’s 26.
Overall, analysts remain bullish on Nvidia’s prospects, citing strong demand for its chips and the potential for new AI applications to drive further growth in the coming quarters. The company’s impressive performance continues to reinforce investor confidence in the semiconductor industry’s future.
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