Nvidia Corp surged 24 percent in one of the largest one-day gains in value on the US stock market. This means that AI stocks have to be acknowledged as a game changer in the stock markets.
The surge more than doubled the stock’s value for this year and increased the chip designer’s market capitalisation by about US $184 billion to nearly US $939 billion. The second largest chip firm is Taiwan’s TSMC. The surge in stocks yesterday makes Nvidia twice as big as TSMC.
In the United States, it trails only trillion-dollar-value companies Apple Inc, Alphabet Inc, Microsoft Corp and Amazon.com Inc.
Price target more than doubles
The remarkable earnings also set off a rally for AI-focused firm partiicularly in the chip sector. Stock markets from Japan to Europe experienced a lot of activity with stocks lifting from Japan to Europe. In the US, Big Tech companies other than Amazon closed between 0.6 percent and 3.8 percent higher, while Advanced Micro Devices Inc closed 11 per cent higher.
Analysts raised the price targets on Nvidia stock, with nearly 20 equity analysts lifting their view on the idea that all roads in AI lead to the company as it dominates the market for chips used to power ChatGPT and many similar services. The average price target has more than doubled this year.
At the highest view, Nvidia will have a value of US$1.59 trillion, around that of Alphabet. Analysts claimed that this is the first time in the last 20 years that a company’s guide was put up with the second quarter outlook, exceeding beyond any expectations.
Fifth most valuable US company
Nvidia is the fifth-most valuable US company. It has projected quarterly revenue of more than 50 percent above the average analysts’ estimate. The company announced that it would have more supply of AI chips in the second half to meet a surge in demand.
CEO Jensen Huang said US $1 trillion worth of current equipment in data centres would have to be replaced with AI chips, as generative AI is applied into every product and service. The results bode well for Big Tech companies, which have shifted focus to AI.
Hopes are on technology to help a weak economy recover by attracting demand at a time when profits for digital advertising and cloud computing are under pressure in today’s economic climate.
AI is the next driver of growth
Analysts said Nvidia’s results show that the generative AI boom could be the next big driver of growth.
We’re really just seeing the tip of the iceberg. This really could be another inflection point in technological history, such as the internal combustion engine — or the internet,” said Derren Nathan, Head of Equity Analysis – Hargreaves Lansdown.
Nvidia is now worth more than two-thirds of Tesla.
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