Nvidia on track for a record spurred by demand for AI chips

nvidia is nearing a market capitalization of $1 trillion as it edged toward an all-time share price high on Thursday morning, thanks to a gargantuan earnings report that beat consensus estimates.

Nvidia’s previous all-time high came in November 2021, when the share price closed above $333. Shares opened Thursday at $385 and gave back some of the overnight gains.

The chipmaker’s market capitalization was on track to open at $975 billion after rising 30% in after-close trading on Wednesday. The company reported first-quarter adjusted earnings per share of $1.09, versus a Refinitiv consensus estimate of 92 cents. Its first-quarter revenue of $7.19 billion was significantly above a consensus estimate of $6.52 billion.

But it was the chipmaker’s leadership position as an AI chip provider, coupled with guidance for $11 billion in sales for the current period, that may have sent shares soaring further.

The rising stock price puts Nvidia within reach of a trillion-dollar valuation, something only a handful of publicly traded companies have ever achieved. Apple it was first valued at $1 trillion in 2018 and reached a valuation of $3 trillion in 2022. Alphabet, Amazonsaudi Aramco, tesla, Goal and Microsoft all at some point have been valued at $1 trillion or more.

Analysts moved quickly to raise Nvidia’s price targets after the company reported earnings results. JPMorgan doubled its price target from $250 to $500 and reiterated its overweight rating. “Generative AI and large language/transformer models are driving accelerating demand,” said Harlan Sur, an analyst at JPMorgan.

“What can we say other than WOW?” Evercore analyst CJ Muse wrote in a note on Wednesday. Evercore raised its price target from $320 to $500 and reiterated its outperform rating.

The meteoric rise in Nvidia’s valuation isn’t lifting other chipmakers, though. The craze for AI chips has been driven by the demand for high-powered graphics processing units, or GPUs. The company has been a historical outperformer in the high-performance “discrete” GPU market, especially when compared to Intel.

But neither Intel, which has reportedly had trouble managing inventory concerns and recently executed major cost cuts, nor AMD has been able to achieve the same level of stock price growth as Nvidia. Intel shares are up nearly 10% year-to-date as of the close of business on Wednesday; AMD shares are up 67% in that same time.

Nvidia shares were already up 109% year to date, prior to the after-hours surge.

CNBC’s Michael Bloom and Kif Leswing contributed to this report.