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Nvidia Stock Tops Its Record. What's Driving Shares Higher

$NVIDIA Corp(NVDA)$   stock reached its highest closing on record. Shares were up 2.4% at $138.07, while the Nasdaq Composite rose 0.9%. It had traded as high as $139.60 on Monday.

The stock's prior record closing of $135.58 was set on June 18, after Nvidia's 10-for-1 stock split. The stock hit an intraday high of $140.76 two days later.

The chip designer may soon overtake iPhone maker $Apple(AAPL)$   to become the world's most valuable company. As of Monday's close, Nvidia's market valuation was $3.4 trillion, just below Apple's valuation of $3.5 trillion.

Nvidia stock has risen 179% this year on booming demand for artificial intelligence and the company's advanced semiconductors. That compares with a 23% rise in the benchmark $S&P 500(.SPX)$   and the tech-heavy $NASDAQ(.IXIC)$  , respectively. The stock is up nearly 14 percent this month so far.

Nvidia reported $30 billion in sales in the June quarter, a 122% gain year over year. While some analysts consider the hype around AI to be overdone, most are still bullish on the stock. Out of 65 analysts covering the stock, 93% rate it a Buy or equivalent, according to FactSet.

When Nvidia CEO Jensen Huang was asked whether the current boom can continue or if it was similar to the dot-com overbuild 25 years ago, the executive suggested that the AI infrastructure buildout is still in its early stages.

"The entire computing technology stack is being reinvented," he said on the BG2Pod podcast published Sunday. "We have a trillion dollars worth of data centers that we have to modernize."

Huang said that the $1 trillion invested in global data-center infrastructure would eventually move from traditional server central processing units, or CPUs, to graphics processing units, or GPUs, which are better enabled to power the parallel computations needed for AI workloads. He added that the industry is about $150 billion into the $1 trillion transformation process, which will take place over the next four to five years.

Melius analyst Ben Reitzes reiterated a Buy rating on the stock early Monday, saying that his price target of $165 was still conservative and Nvidia will keep its competitive advantage long term.

"Nvidia's greatest achievement is creating an infrastructure that works at all the big clouds down to the smallest -- and can be monetized the fastest," he wrote in a research note.

Nvidia is an incredibly productive company, and the scale of its profit should continue to delight investors, Reitzes said, which may push the stock to new highs. Nvidia reported a $4.1 million revenue per employee for Nvidia, compared with $2.3 million for Apple and $2.4 million for $Meta Platforms, Inc.(META)$  , Reitzes noted.

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