Chipmaker Nvidia’s upbeat earnings gave its stock a boost unprecedented in the company’s history and in the history of the US stock market.
The California-based company’s stock jumped 28% in after-hours trading as its results far surpassed expectations yesterday (May 24). If the gains hold when markets open today (May 25), the company will add $219 billion to its current market cap of $755 billion in a single day, breaking Apple’s November 2022 record of a $191 billion leap.
Nvidia CEO Jensen Huang said the company was seeing “surging demand” for its data center products amid the rise of accelerated computing and generative AI, according to its May 24 press release. The company’s solid performance not only boosted its own stock, but also shares of other AI-adjacent corporations like rival chipmaker Advanced Micro Devices, generative AI enthusiasts Microsoft and Google, AI software maker C3.ai and Palantir Technologies, and more.
But will it last? In the face of its struggling gaming business, and penny-pinching around AI endeavors at corporations, experts remain cautiously optimistic.
One big number: Nvidia’s massive market cap
$974 billion: Nvidia’s market cap if the massive stock surge holds, widening its lead as the world’s most valuable chipmaker, according to Bloomberg. Another $50 billion and it would breach the prestigious trillion-dollar club, which only has five members at the moment: Apple, Saudi Aramco, Microsoft, Alphabet, and Amazon. Tesla and Meta, made it to the coveted club in 2021, but have since fallen off the list.
Quotable: Is Nvidia’s stock rally sustainable?
“[T]he AI hype will inevitably normalize in the coming months as focus returns to currently stifled demand under the current macroeconomic climate, which could temper optimism over a structural recovery that has been recently priced into the Nvidia stock. Until cyclical tailwinds return, it will be difficult for optimism on longer-term AI-driven secular growth trends to prevail as a structural driving force in valuations.”—Livy Investment Research in March 2023
Throwback: Apple’s $191 billion surge
On November 10, 2022, Apple’s $190.9 billion gain broke the record for the biggest single-day jump by a US-listed company, according to Bloomberg. The uptick came on the back of optimistic data which showed US inflation cooled much more than expected in October, spurring a broader market rally that Apple benefited from. The prior record was held by Amazon, whose stock surged $190.8 billion on a single day in February that year.
Charted: Largest single-day stock jumps in the US
Company of interest: PetroChina Co.
Globally, Nvidia is far from breaking a stock-rally record. Chinese oil and gas company PetroChina, the listed arm of the state-owned China National Petroleum Corporation (CNPC), added almost $600 billion in its first day of trading in Shanghai in November 2007.
💰 The global AI frenzy has nearly doubled Nvidia CEO’s wealth