Nvidia shares rose again Thursday, extending the stock’s incredible run to a new high, as the obvious market leader in AI chip manufacture continues to outperform its megacap tech rivals.
Nvidia (NVDA), which added another trillion in value and surpassed the $3 trillion barrier in just 74 trading days, is now poised to become the world’s most valuable business, surpassing Microsoft (MSFT) late Tuesday and Apple (AAPL) earlier this month.
The stock is predicted to open Thursday at $3.46 trillion, extending its 2024 gain by around $2.1 trillion.
The tech behemoth’s current climb began in spring 2023 with a revenue-growth prediction that stunned Wall Street and solidified the company’s position as the artificial-intelligence market benchmark.
Since then, under the leadership of Co-Founder Jensen Huang, Nvidia has reinforced its grip on the market for advanced chips and processors that fuel the next wave of AI systems being developed by tech titans such as Amazon (AMZN), Google (GOOGL), and Meta Platforms (META).
These so-called hyperscalers plan to invest over $92 billion this year alone on huge processing equipment. The initiative mirrors their clients’ desire to use their large databases to boost sales in anything from drive-through restaurants to the most complex pharmaceutical research.
Nvidia receives a boost from the Blackwell processor debut.
That’s benefiting Nvidia, which debuted a series of Blackwell computing processors earlier this spring, which are expected to replace the company’s benchmark H100 chips and provide constant sales growth.
“Right now, we’re in an initial investment or research phase of AI, where companies, governments, cloud service providers, etc. are investing in AI and trying to figure out what it can do for them,” said John Belton, portfolio manager at Gabelli Funds.
“The hardware providers such as Nvidia are benefiting, and I think there’s still some room for this initial phase to run.”
Nvidia announced last month that current-quarter revenue will be roughly $28 billion, with a 2% margin for error, despite the fact that the Blackwell processor and software system would not begin delivering until the second half of the year.
Analysts were concerned that a gap between the present H100 chips and the new Blackwell offering would result in a revenue shortfall when consumers cancelled orders for the older chips in favor of the more recent system.
“GPUS, such as Blackwell, are significantly more efficient than CPUs, such as the H100. According to Belton of Gabelli Funds, running a data center with Nvidia GPUs has a cheaper total cost of ownership than running a data center with CPU servers.
“There’s a case to be made that the installed base of CPU servers and data centers will need to be replaced by GPUs in the coming years, and there should be ongoing tailwinds for Nvidia from data-center upgrades and data-center modernization,” the analyst said.
Next destination for Nvidia stock: $4 trillion?
Dan Ives of Wedbush, a longtime Nvidia bull, compares its GPUs to “the new gold or oil in the tech sector,” which will power the “fourth Industrial Revolution.” That revolution, he claims, is already well started.
“Its all about the pace of data-center AI-driven spending, as the only game in town for GPUs to run generative-AI applications all go through Nvidia,” according to Ives. “We believe over the next year the race to $4 trillion market cap in tech will be front and center between Nvidia, Apple and Microsoft.”
