Chip manufacturer Nvidia is poised to surpass Alphabet, Google’s parent company, to secure the third position in terms of market value on Wall Street, as indicated by recent reports. This projection comes on the heels of Nvidia’s market capitalization reaching \(1.78 trillion on February 13, exceeding Amazon’s \)1.75 trillion for the first time in two decades.
On February 13, Nvidia experienced a marginal decrease of 0.17 percent, settling at \(1.78 trillion, while Amazon witnessed a 2.15 percent decline, resulting in a market capitalization of \)1.75 trillion. Alphabet, the parent company of Google, also faced a dip of 1.62 percent, leading to a market value of $1.81 trillion. The likelihood of Nvidia surpassing Alphabet appears plausible, given the robust demand for Nvidia’s AI chips.
Factors Driving Nvidia’s Growth
The upsurge in Nvidia’s stock price is primarily attributed to the unwavering demand for its accelerators that drive AI applications. Nvidia has emerged as a pivotal player in the tech industry’s push to integrate AI into diverse products and services. The company’s graphics processors are highly coveted, with Nvidia currently commanding around 80 percent of the high-end AI chip market.
Prominent tech entities like Meta Platforms are making substantial investments in Nvidia’s offerings. However, the heightened demand for Nvidia’s graphics processors has resulted in component shortages.
Although lead times for Nvidia’s premium H100 processor have slightly decreased, the overall demand continues to outstrip supply, as highlighted by Mizuho analyst Vijay Rakesh.
Nvidia’s substantial growth can be predominantly attributed to its dominance in the high-end AI chip market, holding an 80 percent share. This has led to a 46 percent surge in its stock value this year, following a more than threefold increase in 2023. The optimism surrounding AI has also propelled tech-related companies like Microsoft and Meta to new heights.
Reaction from Wall Street to Nvidia’s Impressive Performance
In 2024, Nvidia’s exceptional performance has prompted several Wall Street firms to revise their price targets.
UBS Group AG, Mizuho Securities, Morgan Stanley, Bank of America Corp., and Goldman Sachs Group Inc. have adjusted their price targets in anticipation of the company’s earnings announcement on February 21.
UBS raised its target to \(850 from \)580 this week, while Mizuho increased its target to \(825 from \)625, emphasizing the sustained high demand for Nvidia’s H100 AI accelerators. Vijay Rakesh of Mizuho acclaimed the stock as the top choice for AI investments.
Nvidia’s shares have surged by 46 percent this year, adding approximately $560 billion in market capitalization.
Market Position and Analyst Forecasts
Nvidia has surpassed its tech counterparts with its market dominance. Despite the stock’s upward trajectory, analysts are finding it challenging to keep pace, with the average 12-month price target of $690 lagging behind the closing price on February 13.
Analysts attribute Nvidia’s success to the ongoing AI boom and significant capital investments in data centers. The company has gained over $600 billion in market value since the beginning of the year, surpassing its growth in the last seven months of 2023.
In the competitive landscape of AI-driven technologies, Nvidia continues to make strides, presenting a formidable challenge to established market leaders. The forthcoming earnings report on February 21 will be closely watched as Nvidia navigates the dynamic tech landscape.
