Nvidia, a dominant AI chipmaker, has surpassed Google-parent Alphabet, securing the position as the third most valuable U.S. company shortly after overtaking Amazon.
Nvidia's shares rose 2.46% to $1.825 trillion ahead of its quarterly announcement. Alphabet's shares increased 0.55% to $1.821 trillion. After exceeding Amazon's market worth, Nvidia's valuation reached its highest in 20 years, according to a Reuters report.
Nvidia's stock price increased by 47% this year, after a more than quadruple gain in 2023. It controls 80% of the high-end AI processor industry. The firm struggles with increased demand, producing shortages of premium components and long cloud-computing processor wait times for AI developers.
(Photo : Justin Sullivan/Getty Images) A sign is posted at Nvidia headquarters on February 05, 2024 in Santa Clara, California.
AI Clamor Drives Record Gains
Technology firms like Microsoft and Meta Platforms have reached historic highs due to excitement for artificial intelligence. Wall Street awaits Nvidia's quarterly report for good results and an optimistic outlook. However, investors warn that any departure from lofty expectations might cause a major sell-off.
Longbow Asset Management CEO Jake Dollarhide underlines Nvidia's status as the AI leader, saying that a poor quarterly report might cause a 20% to 30% sell-off in after-hours trading. Amid the strong demand for premium AI processors, analysts expect Nvidia's Q1 revenue to treble to $20.37 billion and adjusted net profit to rise over 400% to $11.38 billion.
PC gaming graphics cards were Nvidia's major offering in 2002. However, demand for its server AI processors, which cost over $20,000 each has sent Nvidia shares up 246% in the last year. Microsoft, OpenAI, and Meta need tens of thousands for ChatGPT and Copilot operations, powered by artificial intelligence.
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Meanwhile, Amazon posted strong quarterly results on February 1, beating forecasts, per CNBC. This follows the firm's laying off 27,000 workers, allowing Amazon to manage costs more efficiently. Amazon shares have risen 78% in the last year, adding to the world's most valuable corporations' dynamic transformation.
Microsoft overtook Apple as the most valued US firm in January. Microsoft's powerful cloud relationship with OpenAI and new Windows and Office AI technologies contributed to this success.
Nvidia's Other Investments Revealed
In another development, Nvidia's 13F filing with the US Securities and Exchange Commission indicated strategic investments in Arm Holdings, SoundHound AI, and Recursion Pharmaceuticals, as per a report from Bloomberg. Arm is worth $147.3 million, Recursion $76 million, and SoundHound $3.67 million.
Shares of SoundHound rose to 55% in late trade after the transaction. Nvidia reduced its Nano-X Imaging and TuSimple stakes. Nvidia also revealed smaller holdings in Nano-X Imaging and TuSimple Holdings.
Arm was 2023's biggest IPO and is still owned by SoftBank Group Corp., who bought it for $32 billion in 2016. Due to the year-long Arm share increase, SoftBank has gained significantly. The stock has risen over two-thirds to about $130 billion.
In 2020, Nvidia tried to purchase Arm for $40 billion but eventually regulatory pressure led to the failure of the agreement in 2022.
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