Nvidia on track for record high driven by A.I. chip demand

Shares of Nvidia are trading up 25% on Wednesday on the back of an outsize earnings report that beat consensus estimates. And, if it holds throughout trading, they’re set to close at an all-time high.

Nvidia’s prior record high occurred in November 2021, when share price closed over $333. Shares opened Thursday at $385 and gave back some of the overnight gains.

To put its gain in perspective, Nvidia stock is up 235% since its two-year low of $112 on Oct. 14, beating out the performance of any other S&P 500 company since then. Meta is the second best-performing stock with a gain of 97% during the same time period.

The chipmaker’s market cap was on track to open at $975 billion after a 30% jump in after-hours trading Wednesday. The company reported first-quarter adjusted earnings per share of $1.09, versus a Refinitiv consensus estimate of 92 cents. Its first-quarter revenue of $7.19 billion was significantly above a consensus estimate of $6.52 billion.

But it was the chipmaker’s leading position as an AI chip supplier, coupled with it guiding to $11 billion in sales for the current period, that may have sent shares soaring even higher.

The share price rise puts Nvidia within reach of a trillion-dollar valuation, something only a handful of publicly traded companies have ever achieved. Apple was first valued at $1 trillion in 2018 and reached a $3 trillion valuation in 2022. Alphabet, Amazon, Saudi Aramco, Tesla, Meta and Microsoft have all at one point been valued at $1 trillion or more.

Analysts moved rapidly to up price targets for Nvidia after the company reported earnings results. JPMorgan doubled its price target from $250 to $500 and reiterated its overweight rating. “Generative AI and large language/transformer models are driving accelerating demand,” JPMorgan analyst Harlan Sur said.

“What can we say other than just WOW,” Evercore analyst C.J. Muse wrote in a Wednesday note. Evercore raised its price target from $320 to $500 and reiterated its outperform rating.

Nvidia’s meteoric rise in valuation isn’t lifting other chipmakers, however. The AI chip craze has been driven by demand for high-powered graphics processing units, or GPUs. The company has been a historic outperformer in the high-performance “discrete” GPU market, especially compared to Intel.