Nvidia, the world's leading AI chipmaker, is seeing its stock surge as Wall Street gears up for earnings season. The company's market cap has soared past $3.4 trillion, edging closer to Apple's $3.5 trillion, positioning Nvidia to potentially become the most valuable company in the world. On Monday, shares of Nvidia rose by 2.6% to $138.31, pushing the stock toward a record close, driven by continued optimism around its role in the artificial intelligence (AI) boom.
The company's GPUs, which power AI applications like OpenAI's ChatGPT, have made it the dominant player in the AI hardware market, controlling approximately 95% of the market for AI training and inference chips.
Nvidia's rapid growth has been nothing short of astonishing, with its stock up nearly 180% for the year and a ninefold increase since the beginning of 2023. This remarkable rise reflects the skyrocketing demand for AI technology and Nvidia's critical role in supplying the necessary hardware. Key tech giants like Microsoft, Meta, Google, and Amazon are buying Nvidia's GPUs in bulk, fueling the company's dominance. These companies, all scheduled to report their quarterly earnings by the end of October, are heavily investing in AI infrastructure, and a significant portion of that expenditure flows to Nvidia.
Analysts have been bullish on Nvidia, with Mizuho estimating that billions of dollars from tech companies' AI budgets are being funneled into Nvidia's coffers. Nvidia's revenue has more than doubled in the last five quarters, tripling in at least three of those periods. Growth is expected to continue, albeit at a more moderate pace, with analysts forecasting an 82% revenue increase to $32.9 billion for the quarter ending in October. Nvidia has also hinted that its next-generation AI GPU, Blackwell, has generated "insane" demand, with expectations of billions in sales during the fourth quarter alone.
As Nvidia races toward becoming the most valuable company, it stands at the forefront of the AI revolution. Its market cap of $3.4 trillion puts it within striking distance of Apple, which has maintained its position as the world's most valuable company at $3.5 trillion. The competition between these tech giants has intensified over the past year, with Nvidia, Apple, and Microsoft trading places in the top three spots. Nvidia's Blackwell chips, expected to generate $7 billion in fourth-quarter revenue, are expected to further boost its value.
Nvidia's success comes against a backdrop of global tech companies spending billions on AI development. The company is also expanding its partnerships globally, recently announcing a collaboration with Foxconn to build Taiwan's largest supercomputer. Foxconn is set to assemble Nvidia servers at a megafactory in Mexico, a move that reduces Nvidia's reliance on China as trade tensions rise between the U.S. and Beijing. Nvidia's robust software offerings and hardware developments have strengthened its position in the AI industry.
This surge in demand for Nvidia's AI chips is expected to continue, with CEO Jensen Huang confirming that demand for the new Blackwell chips has been overwhelming. Investors are keenly watching the company's next earnings report, scheduled for November 19, which is expected to reveal a staggering 82% growth in revenue compared to the previous year. Wall Street analysts project that Nvidia will bring in $33 billion, further cementing its dominance in the AI space.
The semiconductor industry has seen significant gains in recent months, driven by Nvidia's rise and the broader demand for AI hardware. Taiwan Semiconductor Manufacturing Co. (TSMC), which manufactures Nvidia's chips, reported stronger-than-expected sales, reinforcing confidence in the sector. Industry experts, including Patrick Moorhead of Moor Insights and Strategy, believe that the AI boom will continue to fuel growth in the chip sector for the foreseeable future. With AI investments showing no signs of slowing down, Nvidia is poised to remain a key player in the market.
Nvidia's stock has faced volatility in recent months, including a brief decline following its second-quarter earnings report in August, which fell slightly below analyst expectations. Concerns over the U.S.-China trade relationship and reports of a subpoena from the Department of Justice also contributed to the dip in share prices. However, Nvidia has quickly rebounded, regaining its upward momentum as demand for AI technology continues to drive investor confidence.
