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Nvidia Makes Wall Street History As Stock Surge Adds $277 Billion in Market Cap

Dow Jones02-23

Nvidia’s stock pops 16% to spur biggest one-day gain in market capitalization by any U.S. company

Nvidia wowed Wall Street with its quarterly results and forward commentary Wednesday.

It’s a testament to Nvidia Corp.’s blockbuster run over the past year that Wall Street is, in a way, looking past eye-popping metrics like a quintupling of data-center revenue in the latest quarter.

Investors have become so accustomed to that sort of performance from Nvidia that they’ve increasingly been wondering how long the company can keep growing. But as Nvidia’s stock surged 16.4% Thursday, it appeared that Wall Street was satisfied with the company’s long-term message.

Nvidia’s Thursday stock rally added $277 billion to the company’s market value, making for the biggest one-day haul ever by any U.S. company, according to Dow Jones Market Data. Facebook parent Meta Platforms Inc. added $197 billion to its valuation on Feb. 2.

Nvidia’s stock secured a new all-time high of $785.38. It also saw its best single-day percentage increase since its 24.4% rally from May 23, 2023.

In light of talk on Wall Street about growth sustainability, one comment from management stood out to Bernstein analyst Stacy Rasgon.

“[O]ver the longer term the company not only sees accelerated compute ramping through the current $1 trillion of installed data-center infrastructure but also sees that installed base doubling to $2 trillion over the next five years,” Rasgon wrote in a note to clients.

That expansion of the installed base “feels almost scary but if true would suggest absolutely mammoth growth potential still to come,” he continued.

In Rasgon’s view, Nvidia’s stock story “still feels like it has legs,” while the company’s opportunity in the data-center business “is enormous, and still early, with material upside still possible.”

He rates the stock at outperform and lifted his price target to $1,000 from $700.

Adjectives were flying around as analysts digested Nvidia’s report, with TD Cowen’s Matthew Ramsay calling out “seemingly insatiable demand for Nvidia-based AI solutions” that suggests a run rate upwards of $80 billion for Nvidia’s data-center business.

“We continue to believe the industry is in the early innings of two transformational paradigm shifts toward accelerated computing and generative [artificial intelligence] — with Nvidia firmly positioned as the leader in both,” Ramsay wrote.

He was encouraged by management’s commentary that about 40% of data-center revenue came in support of inference applications. Inference in AI is when models make predictions from data.

“That nearly half of Nvidia’s data-center revenues support inference workloads is yet another proof point that [large-language-model] inference will be a major demand driver for Nvidia and others’ accelerators going forward,” he wrote.

Ramsay has an outperform rating on Nvidia shares and boosted his target price to $900 from $700 late Wednesday.

Cantor Fitzgerald’s C.J. Muse cheered Nvidia’s “Goldilocks” messaging, saying the company’s guidance was “just right” and offered “plenty of room for upside to estimates throughout the year.”

Nvidia’s expectation that demand will outstrip supply this calendar year implies the potential for sequential top-line growth for the duration of the period. Meanwhile, Muse noted that executives “suggested expected shortages for new products launching, including H200, Spectrum-X, and B100, giving confidence that growth will continue well into [calendar 2025].”

Muse lifted his price target to $900 from $775 late Wednesday, with that new target “arguably conservative” and reflective of a 32-times multiple of his $28 estimate for adjusted earnings per share next calendar year.

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  • Upswing118
    ·02-23
    can sustain?
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  • Longmanlee
    ·02-23
    NVIDIA is king of wall street
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