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Shares in Nvidia (NVDA.O) hit an intraday record on October 14, 2024, closing at US$138.07 inching closer to displacing Apple (AAPL.O) as the world's most valuable company.
The company's stock jumped 2.4 percent, fueled by strong investor confidence due to growing demand for its current and next-generation AI processors.
As of now, Nvidia's market capitalization stands at US$3.39 trillion, just below Apple's US$3.52 trillion. In third place stands Microsoft (MSFT.O) with market value at US$3.12 trillion. This recent run-up follows after Nvidia recently briefly took over the top spot as the most valuable company in the world in June. However, it was quickly knocked off by Microsoft soon, ensuing a neck-to-neck competition between the two for the rest of the summer.
Nvidia is dominating the AI space among some of the top Wall Street performers like Alphabet (GOOGL.O) and Amazon (AMZN.O).
“We believe the major companies in AI ... face an investment environment characterized by a Prisoner's Dilemma — each is individually incentivized to continue spending, as the costs of not doing so are (potentially) devastating,” TD Cowen analysts said in a recent report. They highlighted that every firm is driven to continue investing heavily in AI since the risk of not doing so is catastrophic.
TD Cowen reiterated the price target on Nvidia at US$165, which it designated as its "Top Pick."
Demand for the company's current generation of AI chips remains strong.
However, the AI chipmaker informed investors that it has delayed the ramp-up of production on its next-generation Blackwell chips, which may now arrive in the fourth quarter. Although the Investors were reassured by the company as its existing products are doing well in sales.
Other tech players also posted strong gains as the quarterly reporting season approached, with Apple rising almost 2% and Microsoft by 0.7%. They helped the benchmark S&P 500 rise by 0.8% for the session to a record closing level.
Not to be overlooked is the sway of Apple, Nvidia, and Microsoft, which account for about 20% of the market weight of the S&P 500.
Taiwan Semiconductor Manufacturing Co, the only subcontractor that churns out processors for Nvidia, is also poised to book a 40% growth in quarterly profit as orders soar.
Industry analysts estimate that investment in AI data centers will fuel Nvidia's annual revenue to nearly US$126 billion, more than double its current figures.
Nvidia's recent rally has sent the S&P 500 to unprecedented heights, but investors are still wary of early warning signs that AI spending is peaking, indicating a slowdown for the broader tech sector.
