There is no one to stop Nvidia. The company Founded in a California fast food restaurant in 1993 has become the stock market king of artificial intelligence thanks to its powerful microprocessors. After presenting results and forecasts that exceeded expectations, the company’s shares appreciated 9% on the stock market this Thursday shortly after the opening of the session. With this, it reaches a valuation of 2.55 trillion dollars and consolidates itself as the third most valuable company in the world, only behind Microsoft and Apple. It’s already worth more than Amazon and Tesla combined.
The shares opened the session at $1,020.28, exceeding the $1,000 mark for the first time. During the first hour of the session, they marked a historical maximum of $1,042.60 per share, which represented an increase of 9.8% compared to Wednesday’s close. The rise has been greater than what was anticipated on Wednesday outside of normal trading hours. Nvidia has announced a split a split (split) of each share by 10, which will lower its nominal price, “to make the shares more accessible to employees and investors,” as he explained. Economically, it is a neutral operation, but it is usually well received by the market. Nvidia has also announced a 150% increase in the dividend, from 4 to 10 cents per current share.
With its rise this Thursday, Nvidia has accumulated a rise of 115% so far this year and 237% in 12 months. It is the star value of the market in a race that accelerated just a year ago when it published forecasts that left analysts stunned.
The company led by Jensen Huang, 61, published the results of its first fiscal quarter (February to April) on Wednesday. Revenues skyrocketed by 262%, to 26,044 million dollars (about 24,070 million euros at the current exchange rate) and profits multiplied by more than seven, going from 2,043 to 14,881 million, an increase of 628%, exceeding analysts’ expectations. For the second quarter he has communicated that he expects to bill about 28,000 million dollars, with a gross margin of 74.8%, also above what the market expected.
Analysts have applauded the results. Bank of America has raised the target price of the stock to $1,320 ($132 after executing the split), so it still sees notable room for revaluation. At that price, Nvidia would surpass Microsoft and Apple as the most valuable company in the world.
“Not only is Nvidia growing its sales faster than any other large-cap stock (first-quarter sales were up 262% year-over-year), but it’s also generating FCF margin [flujo de caja libre] higher than 57%. At this rate, Nvidia could generate more than $120 billion in FCF over the next two years and more than $200 billion in FCF over the next three years, creating a strong growth option,” say Bank of America analysts. , which highlight their financial strength to invest and protect their competitive position. “According to Nvidia, every dollar of investment generates five dollars of hosting revenue over four years for customers, which is a strong return on investment,” they add.
For the investment firm, Nvidia is its first choice in the sector due to the “unparalleled combination” of a series of factors. Among them is a turnkey system design that they believe can maintain a market share of more than 80% in the AI accelerator market, which could double annually to reach $100 billion in 2024, doubling from new up to $200 billion in 2027 and reach $300 billion or more in 2030. Additionally, they value Nvidia’s dominant position in a wide range of customer verticals and a consistent execution of the roadmap that ensures a transition to the Blackwell product, a next-generation ultra-powerful computing platform, as well as sustained networking growth.
Lewis Grant, of the fund manager Federated Hermes, points out that Nvidia’s results “have blown up the highest expectations.” Grant highlights the potential of AI, noting that, “although current monetization is firmly in the infrastructure space, it is hard to deny that the foundation is in place to create something special.” However, he calls for caution, as “not all AI developments will change the world and the industry.” Despite this, “confidence is the key and Nvidia’s results continue to fuel euphoria,” he says.
In the first quarter, the data center business continued to be the driver of revenue, with $22,563 million, a figure that is more than five times that of a year ago. This division already accounts for 87% of the company’s turnover, compared to 60% in the first quarter of last year. Growth in the microprocessor and data center computing platform business has been driven by strong and accelerated demand for generative AI training and inference from its Hopper platform, the company said. Beyond cloud service providers, generative AI has expanded to consumer internet companies and enterprise customers, automotive, healthcare and even states, creating multiple multi-billion dollar vertical markets. Nvidia claims to be prepared for the next wave of growth.
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