U.S. semiconductor company Nvidia surpassed a market capitalization of $1 trillion on the 30th (local time), becoming the first semiconductor company to do so. Nvidia, considered the biggest beneficiary of the artificial intelligence (AI) boom, has seen its stock price soar about 180% just this year.
On the morning of the day at the New York Stock Exchange, Nvidia's stock price was trading around $409.23, up 5.02% from the previous close. It surged more than 7% shortly after the opening, reaching the $419 range, and has since maintained gains around 5%. The intraday market capitalization reached $1.011 trillion. This is the first time a semiconductor company has joined the $1 trillion market cap club. If the stock price stays above $404.86 until the market close, Nvidia will officially join the $1 trillion market cap club based on the closing price. Currently, only a few companies belong to the $1 trillion market cap club, including Apple, Microsoft, Saudi Aramco, Google Alphabet, and Amazon.
Nvidia's stock price has surged nearly 180% this year alone. This is a result of the AI boom, led by technologies like ChatGPT. Nvidia currently supplies over 90% of the high-value-added semiconductors such as GPUs used in AI development to the global market. Its first-quarter revenue was $7.19 billion, exceeding market expectations by more than 10%. Furthermore, Nvidia recently projected second-quarter revenue of $11 billion, surpassing Wall Street estimates by over 50%, surprising investors.
Srinivasan Pajjuri, Executive Director at Raymond James, stated in an investor memo, "A war is raging in the AI field, and Nvidia is currently the only weapons supplier." He added, "As a result, we can see a significant increase in revenue." Although he initially judged that exceeding earnings guidance by about 5% would be enough to sustain the current stock price, he repeatedly emphasized that the actual figure exceeded 50%.
Wall Street investment banks such as JP Morgan and Evercore ISI have also raised Nvidia's target stock price to as high as $500. They believe there is still double-digit upside potential. Harlan Sur, a JP Morgan analyst, cited "massive demand for generative AI" as the reason for the target price increase and predicted "an even stronger wave is coming." According to Yahoo Finance, Wall Street's current investment opinions on Nvidia overwhelmingly favor buying, with 49 buy recommendations, 8 holds, and 1 sell. The average target price from these institutions is $439.73.
On the other hand, some express caution that Nvidia's stock price has risen excessively. Cathie Wood, CEO of Ark Investment and known for investing in tech stocks, tweeted the day before, "I have believed since 2014 that Nvidia would continue to lead the AI era," but added, "However, Nvidia's stock price is currently 25 times this year's expected revenue, which is too far ahead," showing a skeptical view. Wood's CEO fully liquidated Nvidia from her fund in January, but the company's stock price has surged since then.
Meanwhile, fueled by the AI boom, Nvidia unveiled a large number of new AI-based products and services the day before. The high-performance supercomputer DGX GH200 is characterized by combining 256 GH200 superchips to secure massive memory. Microsoft, Google, Meta Platforms, and others are expected to use this supercomputer to compete in conversational AI services like ChatGPT. The platform unveiled alongside it, 'Nvidia ACE,' applies generative AI to video game development and more. Nvidia CEO Jensen Huang emphasized that AI is leading a computing revolution.
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