Updated February 24th, 2024 at 14:31 IST

Nvidia surges to $2 trillion valuation amid AI frenzy on Wall Street

The company's value skyrocketed from $1 trillion to $2 trillion in around eight months, a feat achieved faster than tech behemoths like Apple and Microsoft.

Reported by: Business Desk
Nvidia | Image: Nvidia
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Nvidia’s rise continues: Chipmaker Nvidia briefly reached a market value of $2 trillion on Friday, propelled by unprecedented demand for its chips driving the generative artificial intelligence wave. 

The Silicon Valley giant's ascent was fuelled by a revenue forecast that added $277 billion to its market capitalisation in a single day, marking Wall Street's largest one-day gain on record.

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Analysts draw parallels between Nvidia's rapid growth and the suppliers during the 1800s gold rush, as its chips power nearly all major generative AI players, from OpenAI to Google. 

The company's value skyrocketed from $1 trillion to $2 trillion in around eight months, a feat achieved faster than tech behemoths like Apple and Microsoft.

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According to Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, the challenge for AI companies lies not in demand but in meeting the surging demand capacity. 

Nvidia's shares closed 0.4 per cent higher, settling at a market value of approximately $1.97 trillion, following a record high of $823.94 earlier in the session, spurred by a 16 per cent surge on Thursday.

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Nvidia's shares have surged by nearly 60 per cent this year, with a tripling in value in 2023. Its remarkable growth significantly contributed to the S&P 500's gains, accounting for more than a quarter of the stock index's rise this year. 

The company's market-beating forecast of 233 per cent growth in first-quarter revenue further buoyed global markets to record highs on Thursday.

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The company's exponential growth has attracted widespread attention from analysts and investors globally. 

Despite its share surge, Nvidia's valuation has seen a relative decline due to analysts' rapid increases in estimates, with a 12-month forward price-to-earnings ratio of approximately 31, down from 49 times a year ago.

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Analyst Brian Colello from Morningstar anticipates Nvidia's revenue to continue rising throughout fiscal 2025 as leading cloud computing companies increase their capital expenditure to meet the demand for AI training and inference, with Nvidia positioned to reap the benefits.

(With Reuters Inputs)

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Published February 24th, 2024 at 13:22 IST