Chipmaker Nvidia is reportedly on track to become Wall Street’s third most valuable company, surpassing Google’s parent company Alphabet. The expectations come as the Santa Clara-based artificial intelligence (AI) chipmaker’s market capitalization reached $1.78 trillion on February 13, surpassing Amazon’s $1.75 trillion for the first time in 20 years. This is what came out.
On February 13, Nvidia stock fell 0.17% to close at $1.78 trillion, while Amazon stock fell 2.15%, giving it a market cap of $1.75 trillion. Alphabet, which owns Google, also fell 1.62%, with its market capitalization settling at $1.81 trillion. This gap seems surmountable, especially since demand for Nvidia’s AI chips remains high.
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Why is NVIDIA soaring?
Nvidia’s stock price surge can be attributed to insatiable demand for accelerators to power AI tasks. Nvidia has become a major player in driving the technology sector to integrate AI into products and services. The company’s graphics processors are in high demand, and Nvidia currently controls about 80% of the high-end AI chip market.
Big tech companies like Meta Platforms are investing billions of dollars in Nvidia products. However, the increasing demand for graphics processors has created a shortage of components.
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Although lead times for NVIDIA’s premium H100 processors have shortened, overall demand still significantly exceeds available supply, according to Mizuho analyst Vijay Rakesh.
The company’s growth is largely due to Nvidia controlling about 80% of the high-end AI chip market, which has contributed to a 46% rise in the company’s stock price this year, following a more than triple jump in 2023 . The optimism around AI continues. It also pushed technology companies like Microsoft and Meta to record highs.
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Wall Street reacts to Nvidia’s enthusiastic rally
Nvidia’s impressive performance in 2024 has led several Wall Street companies to raise their price targets.
UBS Group and Mizuho Securities, along with Morgan Stanley, Bank of America, and Goldman Sachs Group, adjusted their price targets ahead of their February 21 earnings announcements.
This week, UBS raised its target to $850 from $580 and also revised its earnings per share forecast upward. Mizuho highlighted the strong demand for Nvidia’s H100 AI accelerator, raising its target price from $625 to $825. Mizuho’s Vijay Rakesh said the stock is a top candidate for AI investment.
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The company’s stock has soared 46% this year, adding about $560 billion to its market value.
Market position and analyst expectations
As a market share stronghold, Nvidia outpaces the big tech companies. Despite the stock’s rise, analysts have struggled to keep pace, with their average 12-month price target of $690 below the stock’s closing price on February 13th.
Analysts attribute Nvidia’s success to the ongoing AI boom driven by huge capital investments in data centers. The company’s market value increased by more than $600 billion in the new year, outpacing growth over the previous seven months of 2023.
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In the competitive landscape of AI-driven technologies, Nvidia continues to advance, posing a formidable challenge to existing market leaders. All eyes will be on the company’s earnings report scheduled for February 21 as it navigates the dynamic high-tech market.
(Information provided by Bloomberg and Reuters)
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