Nvidia (NASDAQ:NVDA) shares continued their upward trajectory on Thursday, setting a new record and solidifying its position as the leading AI-chip producer, outpacing its megacap tech rivals.
Nvidia, which took just 74 trading days to add another trillion in value and surpass the $3 trillion mark, is poised to open as the world’s most valuable company, having overtaken Microsoft (NASDAQ:MSFT) late Tuesday and Apple (NASDAQ:AAPL) earlier in the month.
On Thursday, Nvidia is expected to open with a valuation of $3.43 trillion, marking a $2.1 trillion increase in 2024 alone.
The tech giant’s impressive rise began in spring 2023 with a revenue-growth forecast that stunned Wall Street, establishing Nvidia as the benchmark in the artificial intelligence market.
Under the leadership of Co-Founder Jensen Huang, Nvidia has solidified its dominance in the market for advanced chips and processors essential for the new wave of AI systems being developed by tech giants such as Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOGL), and Meta Platforms (NASDAQ:META).
Jensen Huang has witnessed the chipmaker he co-founded in 1993 become the world’s most valuable company in just three decades.
These hyperscalers are projected to invest around $92 billion this year alone to expand their massive computing infrastructure, driven by their clients’ efforts to leverage large datasets to enhance everything from drive-through dining to complex pharmaceutical testing.
Nvidia Boosted by Blackwell Processor Launch
Nvidia’s recent success is bolstered by the launch of its Blackwell computing processors earlier this spring. The Blackwell processors are expected to replace the company’s flagship H100 chips, ensuring sustained revenue growth.
“We’re currently in an initial investment or research phase of AI, where companies, governments, and cloud service providers are investing in AI to explore its potential,” said John Belton, portfolio manager at Gabelli Funds. “Hardware providers like Nvidia are benefiting from this phase, and there’s still room for growth.”
Nvidia recently announced that its current-quarter revenue is projected to rise to around $28 billion, with a 2% margin for error, despite the Blackwell processors and software not shipping until the latter half of the year.
Analysts had been concerned that a gap between the current H100 chips and the new Blackwell offerings might cause a temporary dip in revenue as customers delayed orders for the older chips in anticipation of the newer system.
Graphics-processing units like Blackwell are significantly more efficient than central-processing units such as the H100. This efficiency reduces the total cost of ownership for running data centers with Nvidia’s GPUs compared to CPU servers, noted Belton from Gabelli Funds.
“There’s a strong case that the existing base of CPU servers in data centers will need to be replaced by GPUs in the coming years, providing ongoing tailwinds for Nvidia from data-center upgrades and modernization,” he added.
Next Target for Nvidia: $4 Trillion Valuation?
Dan Ives of Wedbush, a long-time Nvidia advocate, compares its GPUs to “the new gold or oil in the tech sector,” which he believes will drive a “fourth Industrial Revolution.” According to Ives, this revolution is already in progress.
“The focus will be on the pace of AI-driven data center spending, as Nvidia remains the key player for GPUs running generative-AI applications,” Ives said. “We believe the race to a $4 trillion market cap in tech will be between Nvidia, Apple, and Microsoft over the next year.”
Featured Image – Will Buckner, CC BY 2.0 <https://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons
