Nvidia stock value rise by $277 billion in the market, the biggest one-day gain in Wall Street history, as the chipmaker’s quarterly report exceeded forecasts and stoked hopes for artificial intelligence.
What does the Nvidia do?
The American semiconductor company NVIDIA Corporation (NVDA) is a top producer of high-end graphics processing units (GPUs) worldwide. As of 2023, NVIDIA, a California company with its headquarters in Santa Clara, controlled around 80% of the world market for GPU semiconductor chips.
Nvidia Stock Value
The stock of the company soared by 16.4% and closed at a record high of $785.38. This boosted its market capitalization to $1.96 trillion after the January-quarter report was released on Wednesday. The report showed that demand for the company’s specialized chips used in AI computing continued to surpass the already-high expectations of analysts.
The results of the company based in Santa Clara, California, have provided new impetus to the global technology stock rally associated with artificial intelligence (AI), which has driven the S&P 500 (.SPX), opened a new tab, Europe’s STOXX 600 (.STOXX), opened a new tab, and Japan’s Nikkei share average (.N225), opened a new tab, to all-time highs.
On February 23, 2024, Nvidia’s shares worth $65 billion were traded, accounting for almost one-fifth of all trading in S&P 500 stocks.
On February 2nd, Meta Platforms (META.O) gained $196 billion in stock market value, setting a record. However, Nvidia broke that record by achieving the largest one-day increase in Wall Street’s history. This happened after the Facebook parent company announced its first dividend and posted strong financial results.
The market value of Nvidia rose on Thursday to $265 billion, which is now greater than the entire market value of Coca-Cola (KO.N).
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With its recent gains, Nvidia has become the third most valuable company in the US stock market, surpassing Amazon and Alphabet.
Microsoft (MSFT) and Apple (AAPL) are the two most valuable companies on Wall Street, with market values of $3.06 trillion and $2.85 trillion, respectively.
Nvidia’s stock has risen by 58% in 2021, which has contributed to more than a quarter of the S&P 500’s overall increase so far this year. This means that Nvidia’s prospects are important not only to those who directly own its shares, but also to those who have invested in index funds that are commonly held in retirement savings accounts.
According to Russ Mould, the investment director at AJ Bell, during the gold rush in the mid-1800s, the individuals who profited the most were not the ones who searched for gold, but those who supplied the tools and equipment necessary to extract it.
“Nvidia is effectively playing the same role today in this tech revolution.”
Companies rushing to upgrade their AI offerings are driving soaring demand for Nvidia’s chips, helping the Silicon Valley firm to forecast a whopping 233% growth in current-quarter revenue. This is above market expectations of a 208% rise.
Additional chip manufacturers that have investments in AI also experienced a surge in their stock prices. Advanced Micro Devices (AMD.O) saw an increase of approximately 11%, while Broadcom (AVGO.O) experienced a 6.3% rise. The Philadelphia chip index (.SOX) surged by 4.97% to reach a record high, marking its most significant one-day gain since May 2023.
The S&P 500 surged 2.11% to a record high, and the Nasdaq jumped nearly 3%, leaving it just short of its first record-high close since November 2021.
Super Micro Computer (SMCI.O), which sells server equipment for AI, jumped over 30%. Its year-to-date gain is more than 240%.
Nvidia, which dominates 80% of the high-end AI chip market, reported a more than threefold increase in fourth-quarter revenue from a year ago, reaching $22.10 billion.
However, several analysts were concerned that China’s revenue growth would be harmed by US restrictions on chip sales to that country. China accounted for around 9% of Nvidia’s total revenue in the fourth quarter, a decrease from 22% the previous quarter.
Even though Nvidia’s stock more than tripled in value last year, the company’s forward earnings valuation has decreased due to the rapid rise in analysts’ financial expectations. According to LSEG statistics, Nvidia’s valuation was approximately 30 times expected earnings before to its announcement, which is a decrease from 49 times a year earlier.
Following the findings, at least 17 brokerages increased their price targets. Rosenblatt Securities, one of the most bullish, increased its price objective from $1,100 to $1,400, indicating a $3.5 trillion market value for stocks.
Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, stated that short sellers who were banking on Nvidia’s stock dropping were eager to close those positions on Thursday.
According to Dusaniwsky, short sellers have lost more than $2 billion on paper, bringing their losses to more than $6.8 billion for the year.