Nvidia Leads Stock Market Surge, Nears $4 Trillion Valuation

Nvidia, now recognized as the world’s most valuable company, continues to captivate investors with its remarkable stock rally. On Thursday, the tech giant’s shares surged by over 3%, opening at nearly $140 per share. This uptick added another $100 billion to Nvidia’s already impressive market capitalization, which now stands at a staggering $3.44 trillion. This surge further solidified Nvidia’s lead as the largest company by market value, outpacing tech behemoths like Microsoft ($3.29 trillion) and Apple ($3.26 trillion).

The impact of Nvidia’s rally was felt across the stock market, propelling major indexes to new all-time highs. The S&P 500, closely tied to the performance of Nvidia, Microsoft, and Apple (which collectively represent more than 20% of the index’s total market cap), reached a historic peak of 5,499.99.

Investors’ fascination with tech companies poised to benefit from the rapid expansion of generative artificial intelligence has intensified the race to reach a $4 trillion market cap. Analysts at Wedbush, led by Dan Ives, highlighted Nvidia’s pivotal role in the AI revolution, brushing aside concerns from more conservative investors.

Rosenblatt analyst Hans Mosesmann raised Nvidia’s price target to $200 per share, anticipating a market cap of $4.9 trillion within the next 12 months. This optimistic outlook reflects the confidence in Nvidia’s ability to maintain its growth trajectory, having crossed the $1 trillion valuation mark just last May.

Despite its impressive stock price surge of over 800% in the past 18 months, Nvidia’s valuation metrics raise some eyebrows. The company currently trades at 79 times its trailing 12-month revenues and 42 times its trailing 12-month profits, significantly higher than the median S&P component. This valuation underscores the market’s expectation of Nvidia’s robust earnings growth in the near future.

Nvidia’s dominance in the AI semiconductor chip market, commanding approximately 80% market share, underscores its pivotal role in today’s tech landscape. Since its IPO in 1999 at a split-adjusted share price of $0.04, Nvidia has evolved from a video game-focused company to a leader in AI technology. Jensen Huang, the company’s co-founder and CEO, has seen his wealth soar to about $120 billion, making him the 11th-richest person globally, up from $4 billion just five years ago.

Following a 10-for-1 stock split last Monday, Nvidia’s shares have surged by 15%, further solidifying its position as a top contender in the tech sector.