On Monday, Nvidia’s market value surpassed that of fellow tech giants Amazon and Alphabet. This is an almost unbelievable accomplishment, given that Nvidia’s stock has more than quadrupled in value over the last 15 months as investors bet on the company’s place as the market leader in artificial intelligence.
By far, Nvidia is the most well-known company that makes the semiconductor chips that power creative AI. Investors are excited about Nvidia’s ability to take advantage of the growing interest in and spending by businesses on AI. They are also pleased by the speed with which AI is already producing results. Nvidia’s earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by more than 500% year-over-year last quarter thanks to rapid growth in its AI unit. This was much higher than Amazon and Alphabet’s earnings growth of 20% or more during the same period. Nvidia’s gross sales and profits aren’t as impressive as those of its trillion-dollar competitors. For example, Apple and Microsoft made over $22 billion in profits last quarter, while Nvidia only made $9.2 billion. However, analysts predict that Nvidia’s finances will soon close the gap. Even though Nvidia stock has gone up more than 50% this year, it is still one of the most popular stocks on Wall Street. Both Goldman Sachs and Bank of America experts think it will go even higher, with each setting a price target of $800, which would mean another 8% growth for the stock.
A SURPRISE FACT
Over the last ten years, Nvidia stock has gained 17,000%, which is by far the best return of any stock on the S&P 500. It has almost tripled the return of Advanced Micro Devices, which won silver and is also a chipmaker. Ten years ago, $1,000 would have been worth about $175,000 if put into Nvidia.
WHAT TO KEEP AN EYE ON
Next Wednesday, Nvidia will report its earnings for the fiscal quarter that ended last month. Analysts think the company will report record sales and profits for the third quarter in a row.