Nvidia to join trillion-dollar market cap group with Apple, Microsoft, and Amazon

Nvidia Corporation (NASDAQ: NVDA) is on its way to achieving a trillion-dollar market cap due to its sudden stock surge. The chip maker’s shares rose by 26% on Thursday following a strong earnings forecast and an increase in production scale. Nvidia’s market valuation currently stands at $950 billion, which is almost $200 billion higher than it was at the close of Wednesday. The company’s market capitalization is now twice as large as its Taiwanese rival, TSMC.

Many analysts and experts believe that Nvidia could soon become a trillion-dollar company. Currently, the only other companies with a market valuation of at least $1 trillion include Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), and Amazon (NASDAQ: AMZN).

Speaking about Nvidia’s potential to become the fifth publically traded US company to achieve a trillion-dollar market cap, Needham analyst Rajvindra Gill commented that his company had suggested in 2021 that Nvidia would be the first semiconductor company to reach $1 trillion. Despite the highs and lows that the company has experienced over the past few years, Gill still believes that Nvidia can reach that valuation.

Surge in Demand for Nvidia Products Propelled Stock to Trillion-Dollar-Market-Cap Status

The growth in demand for Nvidia products could lead the company to reach a $1 trillion market cap in a matter of days after the company raised its quarterly sales guidance. The company is experiencing a surge in demand due to accelerated AI adoption and an $11 billion sales forecast for fiscal Q2. In a statement made earlier this week, Nvidia’s CEO Jensen Huang noted:

“The computer industry is going through two simultaneous transitions – accelerated computing and generative AI. Our entire data center family of products – H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand, and BlueField-3 DPU – is in production. We are significantly increasing our supply to meet surging demand for them.”

This development has caused the price of Nvidia’s shares to rise and has fueled a rally in other AI-exposed stocks. For example, tech-rooted companies such as C3.ai Inc (NYSE: AI), Palantir Technologies (NYSE: PLTR), Microsoft, Alphabet, and Advanced Micro Devices (NASDAQ: AMD) all rose significantly in premarket trading yesterday.

With Nvidia’s stock rising more than 108% year-to-date and 50% higher-than-expected sales guidance, Gill commented on the company’s favorable macroeconomic indices. He stated that Nvidia’s customers are racing to meet generative AI-based and large language model (LLM) demands. Meeting these demands will definitely benefit Nvidia, its stock, and its valuation.

Bank of America (NYSE: BAC) senior analyst Vivek Arya described Nvidia’s latest quarterly sales forecast as the company’s most significant. Arya and other analysts have now raised their price targets on NVDA, with one analyst favoring a staggering 64% upside on Wednesday.

Some analysts believe that Nvidia’s short-term explosive growth indicates the potential of generative AI as the next big growth driver. However, others remain reserved and wonder if the bullish AI phase would stand the test of time.