Nvidia becomes world's 4th-biggest firm as m-cap surges $277 billion

Nvidia witnessed an unprecedented surge in its stock market value on Thursday, marking Wall Street’s largest one-day gain in history.

The surge, amounting to a staggering $277 billion, came after the company’s quarterly report exceeded expectations, reigniting a rally driven by optimism surrounding artificial intelligence (AI).

The company’s stock surged by 16.4 per cent, reaching a record-high at $785.38. This surge propelled Nvidia’s market capitalisation to $1.96 trillion following its January-quarter report, which showcased a continued high demand for its specialised chips used in AI computing.

Nvidia’s historic market surge

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Nvidia’s meteoric rise solidifies its position as the world’s fourth-largest company by market capitalisation, trailing only behind Saudi Aramco, Microsoft Corp, and Apple Inc.

Based in Santa Clara, California, Nvidia’s stellar results injected fresh momentum into the global rally in technology stocks associated with AI. This surge drove major indices such as the S&P 500, Europe’s STOXX 600, and Japan’s Nikkei share average to record highs.

Traders exchanged an impressive $65 billion worth of Nvidia’s shares on Thursday, accounting for nearly a fifth of all trading in S&P 500 stocks.

Nvidia’s remarkable increase in market value surpassed previous records, bettering Meta Platforms’ $196 billion gain on February 2, after the parent company of Facebook announced its first dividend and posted results.

The surge in Nvidia’s market value on Thursday even surpassed the entire value of Coca-Cola, standing at $265 billion.

Wall Street dominance

With this surge, Nvidia secured its position as the US stock market’s third-most valuable company, overtaking Amazon.com and Alphabet after closely competing with the two tech giants in recent weeks.

As of now, Microsoft and Apple remain the top two most valuable companies on Wall Street, valued at $3.06 trillion and $2.85 trillion, respectively.

Nvidia’s stock has climbed by an impressive 58 per cent in 2024, contributing to more than a quarter of the S&P 500’s increase year-to-date. This growth not only impacts direct shareholders but also affects owners of index funds commonly held in retirement savings accounts.

AI optimism fuels global rally

Russ Mould, investment director at AJ Bell told Reuters that Nvidia is effectively playing the same role today in this tech revolution as the providers of tools during the mid-1800s gold rush.

The soaring demand for Nvidia’s chips, particularly from companies rushing to upgrade their AI capabilities, led the Silicon Valley firm to forecast a remarkable 233 per cent growth in current-quarter revenue, surpassing market expectations of a 208 per cent rise.

This surge also fuelled the surge for other chipmakers in the AI industry, with Advanced Micro Devices jumping about 11 per cent and Broadcom adding 6.3 per cent. The Philadelphia chip index rallied 4.97 per cent to a record high, marking its biggest one-day gain since May 2023.

Investor concerns amid Nvidia’s rapid growth

While Nvidia’s growth appears promising, some analysts expressed concerns regarding potential challenges such as US curbs on chip sales to China, which may impact revenue growth.

“We’ve gotten well ahead of expectations and baked in a lot for the next three years,” Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest told Reuters.

However, at least 17 brokerages raised their price targets after Nvidia’s results, indicating continued bullish sentiment among investors.