Nvidia (NASDAQ:NVDA) soared to a $2 trillion market value on Thursday, surpassing Wall Street’s already high expectations and sparking a global rally in tech stocks. The chipmaker’s shares surged 15% to a record high of $780.85 after once again exceeding analysts’ forecasts.
This rally made Nvidia the third most valuable U.S. company, with a gain of about $260 billion in market capitalization. The stock’s performance also lifted other chip sector companies and propelled major indices like the S&P 500, Europe’s STOXX 600, and Japan’s Nikkei share average to record highs.
Nvidia’s stock, up nearly 57% this year, has been a major contributor to Wall Street’s gains, accounting for over a quarter of the S&P 500’s increase in 2024. The company’s strong quarterly results are crucial for equity investors, showcasing its dominance in high-growth areas like robotics, crypto, AI, gaming, and autonomous vehicles.
The surge in demand for Nvidia’s chips, especially in AI applications, has been a key driver of its revenue growth. The company forecasted a 233% increase in first-quarter revenue, reflecting the strong demand for its products.
Analysts, however, raised concerns about U.S. restrictions on chip sales to China, which may impact Nvidia’s revenue growth. Sales in China accounted for about 9% of Nvidia’s fourth-quarter sales, down from 22% in the previous quarter.
Despite these challenges, Nvidia’s stock remains attractive to investors, trading at about 29 times its earnings expectations for the next 12 months. Analysts have raised their price targets for Nvidia, with some predicting that the company could reach a $3 trillion market capitalization in the next 12 months.
Short sellers, who bet against Nvidia’s stock, rushed to cover their positions, adding to the buying pressure. They have incurred losses of $2.2 billion on paper, bringing their total losses for the year to $6.84 billion.
Overall, Nvidia’s strong performance and optimistic outlook have solidified its position as a leader in the tech industry, driving its stock to new heights and fueling a broader rally in tech stocks worldwide.
Featured Image: Megapixl
Author Stephanie Bédard-Châteauneuf