On Monday, Nvidia made history by surpassing a market valuation of $3.5 trillion, joining Apple as only the second company to reach this milestone. As of that day, Apple’s market value stood at approximately $3.6 trillion, which it first crossed on July 9.
The anticipation surrounding upcoming earnings reports from major tech companies and electric vehicle giant Tesla drove Nvidia’s stock price up by 4.14%, closing at a record high of $143.71. This performance notably outpaced declines in both the S&P 500 and the Dow Jones Industrial Average, which fell by 0.2% and 0.8%, respectively.
The recent surge in Nvidia’s stock can be traced back to a strong outlook shared by TSMC last week, along with optimistic analyst projections regarding demand for the new-generation AI processor, Blackwell.
However, Nvidia faces a crucial test this Wednesday when Tesla releases its earnings report. Tesla heavily relies on Nvidia GPUs for AI computations, which are essential for training its driver-assistance products and the anticipated humanoid robot set to hit the market.
Following Tesla’s financial report in July, CEO Elon Musk expressed concerns during a conference call, stating, “We see a huge market demand for Nvidia hardware that often makes it difficult to obtain their GPUs. I’m quite worried about whether we will be able to secure them when we need to.”
About a month later, Nvidia released its second-quarter earnings report, showing revenues around $30 billion, exceeding analyst expectations of $28.7 billion. For the third quarter, management projects sales between $32 billion and $33 billion, slightly above Wall Street’s forecast of $31.4 billion.
The earnings performances of other clients, such as Microsoft, Amazon, Alphabet, and Meta Platforms, also contribute to investor forecasts for Nvidia. Collectively, these companies are expected to exceed $60 billion in capital expenditures for the quarter ending September 30, representing a significant 56% increase compared to the same period last year. These four firms account for over 40% of Nvidia’s revenue in the second quarter.
Christopher Rolland, an analyst at Susquehanna, maintained a positive rating on Nvidia, reaffirming a target price of $160. He noted, “The relevant indicators for AI remain robust, and the revised capital expenditures from major cloud providers will support growth in the second half of this year and into next year.” However, he added, “The bar has been raised for most AI stocks, and prior guidance may need to be adjusted upwards to sustain share prices.”
Additionally, Rolland pointed out that the PC market has been disappointing, as AI initiatives in client computers (as opposed to data centers) have not generated the anticipated growth. He currently estimates that PC shipments will grow by about 2% in 2024 compared to the previous year.
