U.S. semiconductor company Nvidia surpassed a market capitalization of $1 trillion intraday 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 more than 170% just this year. It is also expected to join the $1 trillion market cap club soon based on closing prices.
On the day at the New York Stock Exchange, Nvidia's stock closed at $401.11 per share, up 2.99% from the previous session. Shortly after the opening, the price surged over 7% to reach the $419 range. As a result, Nvidia's market cap surpassed $1 trillion during the morning session but later trimmed gains to close at approximately $990.7 billion.
For Nvidia to officially join the $1 trillion market cap club based on closing prices, it must close at $404.86 or higher per share. Currently, only a few companies on the New York Stock Exchange belong to the $1 trillion market cap club, including Apple, Microsoft, Google Alphabet, and Amazon. Previously, Meta Platforms and Tesla crossed the $1 trillion market cap threshold in June and October 2021 respectively, but have since fallen below that level.
Nvidia's stock price has surged more than 170% this year alone, fueled by the AI boom led by technologies such as ChatGPT. When OpenAI launched ChatGPT in November last year, Nvidia's market cap was around $420 billion. Nvidia supplies over 90% of the world's high-value-added semiconductors such as graphics processing units (GPUs) used in AI development, and has recently recorded a sharp rise in sales. Its first-quarter revenue reached $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, noted in an investor memo, "There is a war raging in the AI field, and currently Nvidia is the sole weapons supplier," adding, "As a result, we can see a significant increase in sales."
Wall Street investment banks such as JP Morgan and Evercore ISI have already raised Nvidia's target stock price to as high as $500. On the same day, Bank of America (BoA) also joined this group by raising its target price from $450 to $500 per share. BoA sees more than 24% upside potential from the closing price. BoA analyst Vivek Arya emphasized, "Nvidia, transformed into a data center powerhouse, has highlighted how its platform, which has partnered with over 1,600 generative AI startups, supports its AI leadership," adding, "AI is driving strong annual results, but I believe this is just the beginning." According to Yahoo Finance, as of the morning of that day, Wall Street's investment opinions on Nvidia were overwhelmingly optimistic, with 49 buy recommendations, 8 hold, and 1 sell. The average target price from these institutions was $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 technology stock investments, tweeted the previous day, "I have believed since 2014 that Nvidia would continue to lead the AI era," but added, "However, Nvidia's stock price is now 25 times this year's expected revenue, which is too far ahead," showing a skeptical view. Wood's fund fully liquidated Nvidia shares in January, but the company's stock price has surged since then.
Riding the AI wave, Nvidia unveiled a slew of new AI-based products and services the day before. The high-performance supercomputer DGX GH200 features a large-scale memory by combining 256 GH200 superchips. Microsoft, Google, Meta Platforms, and others are expected to use this supercomputer to compete in conversational AI services like ChatGPT. The newly introduced platform, Nvidia ACE, applies generative AI to video game development and more.
Major foreign media are also focusing on CEO Jensen Huang, a Taiwanese immigrant who founded Nvidia in 1993 and grew it to a $1 trillion market cap company in 30 years. Huang entered the field when central processing units (CPUs) dominated the computer market, anticipating that 3D graphics acceleration technology would become central. His first hit product was the GPU, which enhanced graphics quality for gaming. After confirming that Nvidia's GPUs were well-suited for AI, which requires massively parallel fast computations, the company began to aggressively drive AI development. At a forum held in Taiwan the previous day, CEO Huang emphasized that AI is leading a computing revolution.
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