World
Nvidia Eclipses Microsoft As World’s Second-Largest Company As Stock Climbs To 6-Week High
Topline
Nvidia stock rallied Monday despite a broader down day on Wall Street for its big technology peers, boosting the artificial intelligence heavyweight to reclaim its spot as the second-largest company in the world amid the AI boom.
Nvidia’s centibillionaire CEO Jensen Huang speaks last month at a Washington, D.C., conference.
Key Facts
Nvidia notched its highest intraday share price since Aug. 26 at $130.64, with shares up about 4.2% by mid-afternoon.
The Silicon Valley firm accordingly registered its highest market capitalization since August, and its $3.19 trillion market value sent it past Microsoft ($3.07 trillion) as the world’s second-largest company for the first time in six weeks; Nvidia now only trails Apple’s $3.4 trillion valuation.
Nvidia stock’s strong start to the week came despite broader losses, as the S&P 500 slipped 0.6% as higher bond yields and oil prices ate into the equity boost from shifting U.S. monetary policy.
Shares of all five trillion-dollar tech companies other than Nvidia fell Monday, with Apple down 1.3%, Microsoft 0.7%, Google parent Alphabet 1.4%, Amazon 2.8% and Facebook parent Meta 0.9%.
Why Is Nvidia Stock Up Monday?
Nvidia, which designs a full suite of custom AI technology intended for high-end applications like large-language models, benefitted Monday from fellow AI tech maker Super Micro Computer’s announcement that sales for its liquid cooling products deployed alongside Nvidia’s graphics processing units (GPUs) was strong this quarter. Another bullish analyst note also boosted shares, as Melius Research analyst Ben Reitzes wrote to clients the “setup here is still pretty darn good” for Nvidia stock even as it enjoys an extended bounce. “Strong AI spending” from the likes of Microsoft, Alphabet and ChatGPT parent OpenAI should “catalyze consumption” of Nvidia’s core (GPUs), according to Reitzes. The demand optimism follows continued comments from Nvidia’s centibillionaire CEO Jensen Huang insisting demand for its AI products is “so great” and “insane.”
Key Background
Monday is a continuation of a month-long period of outsized returns for Nvidia, as its 26% return since Sept. 6 trounces the S&P’s 6% gain during the period and its five trillion-dollar peers’ 7% average gain. Nvidia was briefly the world’s largest company in June, when its share price peaked at a still-record $140.76. Previously a fairly low-profile company known for its video game business, Nvidia became a Wall Street darling as its profits skyrocketed amid the generative AI boom. Nvidia’s valuation has increased tenfold over the past two years.
Big Number
$21.9 billion. That’s how much in adjusted profits Nvidia is expected to report in its fiscal quarter ending this month, according to average analyst forecasts tracked by FactSet. That’s a more than 80% year-over-year increase in earnings before interest, taxes, depreciation and amortization (EBITDA) and a more than 1,000% jump from 2022’s comparable period.
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