Nvidia, Jensen Huang and AI on stellar trajectory
ARTIFICIAL intelligence giant Nvidia is closing in on a $2 trillion market value on the back of AI chip demand being at an all-time high in the US.
Shares in Nvidia leapt by almost 13% to a staggering $760.71 today, once again making it the third-most valuable company in the US. If the upward momentum continues, $210 billion will be pumped into its market capitalisation.
Already the S&P500 top performer, Nvidia's shares have skyrocketed almost 37% in 2024.
"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 CEO Jensen Huang's personal stock was also given a boost earlier today when CNBC's Mad Money host Jim Cramer branded the 61-year-old businessman a bigger visionary than Elon Musk.
"I think Musk can see around the corner, but Jensen is thinking about a legacy of changing the entire paradigm about the way the world is," Cramer said.
The rally in chip stocks added 2% to the Nasdaq Composite (.IXIC), opens new tab , while sending European (.STOXX), opens new tab and Japan's Nikkei share average (.N225), opens new tab to record highs.
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.
Robust demand for its graphic processing units from massive datacenters in the middle of an AI upgrade has been bolstering its revenue growth for three quarters.
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Analysts, however, worried that U.S. curbs on chips sales to China may be hurting its revenue growth. Sales in China amounted to about 9% of Nvidia's fourth-quarter sales, down from 22% in the prior quarter.
The company trades at about 29 times its earnings expectations for the next 12 months compared to an industry median of 25.3, according to LSEG data. A year ago the valuation multiple was at 47.
Rapid increases in analysts' earnings estimates imply that its forward earnings valuation has fallen even as its share price rises further.
"We've gotten well ahead of expectations and baked in a lot for the next three years," said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest.
At least 17 brokerages raised their price targets after results.
Rosenblatt Securities was the most bullish with a future price estimation of $1,200, which implies that Nvidia will hit $3 trillion market capitalization over the next 12 months.
