By Adam Clark
Nvidia was rising early on Thursday after becoming the second-most valuable company in the world. The chip maker is now hot on the heels of market leader Microsoft.
Nvidia shares were up 1.5% at $1,242.83 in premarket trading. The stock closed up 5.2% on Wednesday.
The closing price left Nvidia at a market capitalization of $3.01 trillion, its first finish above the $3 trillion mark. That means it leapfrogged Apple and is now behind only Microsoft in the pecking order of the world's largest publicly traded companies by market valuation. Microsoft has a market capitalization of $3.15 trillion.
Nvidia stock has set a number of record closing highs this week after CEO Jensen Huang announced details over the weekend that set out the chip maker's plans for the Blackwell Ultra chip in 2025 and a next-generation Rubin platform for 2026. The company will complete its planned 10-for-1 stock split on Friday this week.
The stock split has led to a flood of short-term wagers on the stock's next move, which could be causing a market phenomenon known as a "gamma squeeze."
A gamma squeeze happens when companies that sell calls -- bullish options plays which give a buyer the right to purchase an underlying asset at a set price and time -- causing more buying pressure and driving the stock higher.
"As we look ahead, we think Nvidia is on pace to become the most valuable company, given the plethora of ways it can monetize AI and our belief that it has the largest addressable market expansion opportunity across the tech sector," said CFRA analyst Angelo Zino in a research note.
Zino has a Buy rating and a $1,160 target price on Nvidia stock.
The company's dominant position looks to have attracted interest from regulators. The U.S. Justice Department is set to investigate whether Nvidia has violated antitrust laws, the New York Times reported, citing people familiar with the matter.
Nvidia didn't immediately respond to a request for comment and a spokesperson declined to comment in the report.
Among other chip makers, Advanced Micro Devices was up 1.0% and Intel was rising 0.2% in premarket trading.
Nvidia shares have risen 147% this year to date through to Wednesday's close. That compares with a 12% rise in the S&P 500 index and a 15% rise in the Nasdaq Composite Index over the same period.
Write to Adam Clark at adam.clark@barrons.com
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(END) Dow Jones Newswires
June 06, 2024 09:19 ET (13:19 GMT)
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