Nvidia's stratospheric stock surge threatens to rocket the AI chipmaker past e-commerce titan Amazon as the 4th largest US company by market cap. The semiconductor giant added a jaw-dropping $600 billion in value over the last three months.
Fueled by explosive growth in its artificial intelligence chips, Nvidia reached a staggering $1.72 trillion valuation. That narrowly trails Amazon's $1.76 trillion market cap as of Thursday's close.
Nvidia stock vaulted over 40% year-to-date, tacking on nearly an entire Tesla in market cap since 2023. The parabolic gains revived bubble concerns, even for bullish Wall Street analysts struggling to keep pace with its orbiting valuation.
The dizzying ascent led investing legend Michael Cuggino to trim his Nvidia position despite remaining confident in its future. "There is so much money chasing it that we thought it prudent to take some profits,” Cuggino noted.
At a nosebleed 33 times future earnings, Nvidia trades at valuations nearing previous peaks. Its RSI technical indicator pierced above 70, signaling to some analysts that the stock ventured into overbought territory.
Yet fundamentals still underpin Nvidia's rally. Earnings estimates surged 14% over the last three months on continuing AI euphoria, though not enough to justify its market cap explosion.
Bulls see AI, not hype, driving durable growth for years. Nvidia's sales are projected to rocket 120% in fiscal 2024, with another 60% growth next year. Its AI chips are considered technically superior and essential for AI computing.
"A lot of companies are talking about AI, but none have seen revenue grow or estimates change like Nvidia," said Gus Zinn of Macquarie Asset Management. "I think it will go on for longer and be bigger than people realize."
Nvidia again steamrolled expectations last earnings report, feeding its Wall Street halo. The quarterly financial beats built faith that its AI boom remains in early innings rather than peaking.
Technically, Nvidia doesn't trade at bubblicious valuations compared to Big Tech peers. It sports cheaper earnings multiples than Microsoft and Amazon, not to mention Tesla.
Nonetheless, with Nvidia exceeding most price targets, analysts may struggle projecting more upside. And maintaining triple-digit growth on towering revenue gets incrementally harder.
Still, between Nvidia's AI leadership, pristine market positioning and insatiable demand, few will bet against Jensen Huang's chip juggernaut continuing to defy gravity.
The next test comes later this month when Nvidia reports fiscal fourth quarter results. Expect another white-knuckled ride if Nvidia crushes estimates as AI growth persists unfazed.
One certainty persists - Nvidia will continue swallowing competitors and market cap whole on its relentless ascent up the tech food chain. Founder Huang has built a golden AI goose that may one day surpass even Apple and Microsoft in value.
Via Fortune
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