When Nvidia crossed the $2 trillion market cap threshold on Friday, tech bull Dan Ives of Wedbush Securities predicted the party was just starting for artificial intelligence stocks.
Revenue has been soaring quarter after quarter thanks to its expertise in powering artificial intelligence (AI) projects. The company's graphics processing units (GPUs) are the fastest around, driving one of the key elements of AI: the deep learning of AI models, which serves as a starting point for their incredible performance down the road.
All of this has helped Nvidia's data center revenue reach record levels, climbing more than 400% to $18.4 billion in the most recent quarter. But this data center business doesn't stop at just a suite of leading AI chips. The company offers customers a full array of products and services through the data center unit to help them advance their AI platforms. And one of these offerings is software and services, a business that just reached a $1 billion annualized revenue run rate in the quarter.
In fact, CEO Jensen Huang said during the earnings call that software should become
"a very significant business over time."
All of this suggests software might be Nvidia's new AI growth driver, further expanding the company's opportunities to dominate in this hot technology. Could this high-flying stock continue to soar? Let's find out.
“The top 10 companies in the S&P 500 today are more overvalued than the top 10 companies were during the tech bubble in the mid-1990s,” wrote Torsten Sløk, partner and chief economist at Rowan’s wealth management firm, in a research note published on Sunday.
The Princeton-trained economist with over 25 years in the industry has adopted a cautious view of late, predicting this month that what appears to be a soft landing for the U.S. is in fact a “fragile equilibrium.” He estimates the chances are greater than 50% that the Federal Reserve will surprise markets by course-correcting: Either it will cut rates in panic or it may end up even having to hike them.
Whereas Ives is a buy-side analyst making a living by marketing tech stocks to clients, Sløk’s employer is actually risking capital and can therefore ill afford succumbing to market hype.
The stock was up 0.8% to $794.64 in recent trading. The closing level to watch for the $2 trillion mark is $800.
Nvidia first closed above $1 trillion on June 13, 2023. Closing above the $2 trillion level yesterday would mark 176 trading days from its $1 trillion close. That would be the fastest such journey on record, according to Dow Jones Market Data.
The same journey took Apple 516 trading days and Microsoft 543 trading days.
Nvidia recently became the third American company to achieve a $2 trillion valuation,
propelled by its impressive post-earnings performance. With its market capitalisation soaring by about $50 billion to reach $2.01 trillion on Friday, Nvidia now stands alongside tech giants Apple and Microsoft in the exclusive $2 trillion club. Surpassing its counterparts in value, Nvidia’s market cap now exceeds that of Amazon by $190 billion and Google parent Alphabet by $212 billion. The company’s unprecedented market cap gain of over $275 billion in a single day contributed to its shares hitting an all-time high of $808 on Friday.
In 2023, the company’s valuation surpassed the one trillion-dollar mark, reflecting the profound impact of its AI-focused ventures and market leadership.