Nvidia: Preparing for a historic jump in its capitalization – 2024-02-26 15:47:29

Another record is expected to be broken by Nvidia today, taking the reins from Meta Platforms as the company with the largest increase in market capitalization in a single session.

Shares of the chip maker rose as much as 15% in premarket trading on Thursday, a trend that if it continues by the market close will add nearly $250 billion to its market capitalization.

That would be the largest single-session increase in market value in history, eclipsing a $197 billion gain that Meta posted earlier this month, according to OT.

Shares of Nvidia are getting a boost from the company’s impressive results that boosted Wall Street’s bets on the potential of its artificial intelligence technologies.

The chipmaker also gave above-expected guidance due to artificial intelligence spending at its biggest customers, including Microsoft Corp. and Meta. A string of better-than-estimated results means shares have become cheaper on a price-to-earnings basis.

The chipmaker shared a positive outlook for the current quarter, saying it expects revenue of about $24 billion, better than Wall Street analysts had predicted. The company’s shares were up 1% in after-hours trading. Its stock is up more than 35% in 2024.

It is noted that Nvidia alone is responsible for a third of the Nasdaq 100 index’s gains this year.

Variability

Traders are bracing for more volatility after Nvidia tripled in value over the past year, fueled by an unrelenting AI frenzy. As the financial agency notes, nerves are already frayed, with the stock falling 4.4% on Tuesday, dragging its large-cap counterparts down with it.

As Reuters reports, its $570 billion increase in market capitalization is more than three times Intel’s market value. Shares of Nvidia, whose chips are considered the gold standard in the artificial intelligence industry, are up nearly 240% in 2023.

The chipmaker’s earnings have accounted for more than a quarter of the S&P 500’s gains this year. The benchmark is up nearly 5% year-to-date, on top of the 24% increase recorded in 2023.

Wall Street’s third most valuable

Now the third most valuable company on Wall Street, behind only Apple and Microsoft, Nvidia has emerged as a barometer for the trajectory of Artificial Intelligence. Other AI-focused stocks have soared this year, including Super Micro Computer, whose stock is up 182% year-to-date, and Arm Holdings, up nearly 71%.