In a historic feat on Wall Street, Nvidia (NVDA.O) experienced a staggering surge in its stock market value on Thursday, adding a monumental $277 billion in a single day. This surge, the largest ever recorded in Wall Street’s history, was triggered by the chipmaker’s quarterly report, which not only surpassed expectations but also reignited a fervent rally driven by optimism surrounding artificial intelligence.
Following the release of its January-quarter report late on Wednesday, Nvidia’s stock catapulted by an impressive 16.4%, closing at a record high of $785.38. This remarkable increase propelled the company’s market capitalization to a staggering $1.96 trillion. Analysts noted that the demand for Nvidia’s specialized chips, crucial for AI computing, continued to surpass already lofty expectations.
The ripple effect of Nvidia’s success was felt across global markets, fueling a surge in technology stocks related to AI. Major indices such as the S&P 500 (.SPX), Europe’s STOXX 600 (.STOXX), and Japan’s Nikkei share average (.N225) all soared to unprecedented heights.
Traders were frenziedly engaged, exchanging a staggering $65 billion worth of Nvidia’s shares on Thursday alone, accounting for nearly a fifth of all trading in S&P 500 stocks.
Nvidia’s monumental one-day increase in market value surpassed all previous records on Wall Street, effortlessly outpacing Meta Platforms’ $196 billion gain on Feb. 2. To put this into perspective, Nvidia’s market value surge on Thursday eclipsed the entire value of iconic companies like Coca-Cola.
This surge propelled Nvidia to become the third-most valuable company in the U.S. stock market, surpassing tech giants like Amazon.com and Alphabet. Only Microsoft and Apple, valued at $3.06 trillion and $2.85 trillion respectively, remain ahead in market capitalization.
The implications of Nvidia’s success are far-reaching, with its stock climbing an astounding 58% in 2024, contributing significantly to the S&P 500’s overall increase. As Russ Mould, investment director at AJ Bell, aptly stated, Nvidia’s role in the tech revolution is akin to those who profited most from providing tools during the gold rush.
The surge in demand for Nvidia’s chips, particularly from companies rushing to enhance their AI capabilities, led the Silicon Valley giant to forecast a remarkable 233% growth in current-quarter revenue, surpassing market expectations.
The bullish sentiment extended beyond Nvidia, with other chipmakers exposed to AI, such as Advanced Micro Devices and Broadcom, also witnessing substantial gains. The Philadelphia chip index rallied to a record high, marking its biggest one-day gain since May 2023.
Despite the euphoria surrounding Nvidia’s performance, some analysts expressed concerns regarding U.S. restrictions on chip sales to China potentially hindering revenue growth. Nevertheless, at least 17 brokerages raised their price targets post-results, with Rosenblatt Securities projecting a staggering $1,400 price target, implying a $3.5 trillion market value.
While short sellers betting against Nvidia’s stock faced significant losses, with over $2 billion lost on paper on Thursday alone, the broader market sentiment remains optimistic, albeit cautious, about the rapid pace of Nvidia’s ascent.
As Nvidia continues to navigate its meteoric rise, its performance remains not only pivotal for direct shareholders but also for owners of index funds widely held in retirement savings accounts, cementing its status as a cornerstone of the ongoing technological revolution.
