Nvidia, the renowned AI chipmaker, achieved a record stock close on Monday, with its shares reaching $138.07, fueled by investor confidence in the company’s continued dominance in AI technology. The company’s stock climbed 2.4% that day, pushing its market capitalization to $3.39 trillion.
Nvidia is now close to surpassing Apple, whose market cap stands at $3.52 trillion, potentially making Nvidia the world’s most valuable company. This follows a previous moment in June when Nvidia briefly held the top spot before being overtaken by Microsoft. Currently, the three tech giants’ market values remain in close competition.
Nvidia’s significant stock growth, nearly 180% this year alone, reflects its stronghold on the AI chip market. According to Mizuho Securities, Nvidia controls 70% to 95% of the market, positioning itself as a key player in the race among major tech companies, including Alphabet, Microsoft, and Amazon, to dominate AI infrastructure. TD Cowen analysts highlighted the competitive environment these companies face, describing it as a “Prisoner’s Dilemma,” where each is incentivized to invest heavily in AI to avoid falling behind. TD Cowen reiterated its $165 price target for Nvidia, naming it their “Top Pick.”
Nvidia’s success has largely been driven by high demand for its current and upcoming AI processors. CEO Jensen Huang, whose net worth is now estimated at $121.5 billion, recently noted “insane” demand for Nvidia’s next-generation Blackwell chips, which are slated for release in the fourth quarter. Despite a brief delay in production of these new chips, Nvidia downplayed the impact, confirming that existing chips are being rapidly purchased. Morgan Stanley, after meeting with Huang and other executives, confirmed that the Blackwell chips are already sold out for the next 12 months.
Nvidia’s strong performance has significantly influenced broader stock market indices. Nvidia, alongside Apple and Microsoft, accounts for roughly a fifth of the S&P 500’s total weight, meaning their movements have a substantial effect on the index’s gains and losses. As a result, Nvidia’s rally has propelled the S&P 500 to a new record close.
Despite concerns from some investors about the possibility of a slowdown in AI infrastructure spending, demand for AI-related technology remains robust, with analysts predicting Nvidia’s annual revenue to more than double, reaching nearly $126 billion, according to LSEG data.
Taiwan Semiconductor Manufacturing Co. (TSMC), which manufactures Nvidia’s processors, is expected to report a 40% increase in quarterly profits on Thursday due to the surge in demand. Nvidia’s position as a key supplier in the AI chip market has also benefited TSMC’s earnings, reinforcing the intertwined success of companies within the AI sector.
Featured Image courtesy of Justin Sullivan/Getty Images
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