Tech

Nvidia races to $2T mark as AI mania sparks Wall Street tech rally

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Nvidia added a record $277 billion in value — the largest single-day market cap increase in history — after the heavyweight chipmaker’s quarterly report beat expectations and reignited a rally fueled by optimism about artificial intelligence.

Shares of the Santa Clara, Calif.-based maker of advanced semiconductors, vital for training AI language models such as ChatGPT, rose by more than 16% to close at $785.38.

Nvidia’s stock surge powered the markets, with the Dow Jones Industrial Average climbing 1.2% – or 456.74 points – while the S&P 500 jumped by 2.1% to close at an all-time high of 5,087.03.

The tech-centric Nasdaq index saw the most substantial gains – rallying by 3% to close at 16,041.62.

Since the start of the year, Nvidia has seen its market capitalization surge by more than 40% to $1.96 trillion – catapulting the firm ahead of tech goliaths Amazon, Alphabet and Meta.

Nvidia reported fourth-quarter revenue of $22.1 billion. Nvidia CEO Jensen Huang, above. REUTERS

Only Microsoft ($3.06 trillion), Apple ($2.85 trillion) and Saudi oil giant Aramco ($2.07 trillion) closed Thursday with a higher valuation.

“The people who made the most money in the gold rush of the mid-1800s were the ones providing the tools to get the job done, not those hunting for the precious metal,” said Russ Mould, investment director at AJ Bell.

“Nvidia is effectively playing the same role today in this tech revolution.”

Nvidia, which controls about 80% of the high-end AI chip market, reported fourth-quarter revenue jump of more than threefold from a year ago to $22.10 billion.

The company said that it anticipates its first quarter revenue this year will hit the $24 billion threshold – far outpacing Wall Street estimates.

“Fundamentally, the conditions are excellent for continued growth” in 2025 and beyond, Nvidia CEO Jensen Huang told analysts on Wednesday.

Some analysts had worried that US curbs on chips sales to China may be hurting its revenue growth.

Nvidia, a bellwether for AI chip demand, re-ignited a global rally in tech stocks. REUTERS

Sales in China amounted to about 9% of Nvidia’s fourth-quarter sales, down from 22% in the prior quarter.

Still, many investors worry about the rapid pace of Nvidia’s gains.

“We’ve gotten well ahead of expectations and baked in a lot for the next three years,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest.

Short sellers betting Nvidia’s stock would fall rushed to close those trades on Thursday, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

Thursday’s gain made Nvidia the US stock market’s third-most valuable company, pulling ahead of Amazon and Alphabet after jockeying with the two tech powerhouses in recent weeks. Getty Images

Short sellers had lost over $2 billion on paper, taking their declines to more than $6.8 billion so far this year, Dusaniwsky said.

At least 17 brokerages raised their price targets after the results. Among the most bullish, Rosenblatt Securities raised its price target to $1,400 from $1,100, implying a $3.5 trillion stock market value.

UBS cut its price target to $800 from $850, reflecting “some potential slowing in revenue growth.”

With Wires

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