Nvidia Briefly Surpasses $2tn Valuation On AI Demand

Nvidia’s market value briefly surpassed $2 trillion (£1.6bn) in early US trade on Friday, following strong financial results earlier in the week that demonstrated how the company is benefiting from its place at the centre of the explosion of artificial intelligence (AI) technology.

Shares in the Santa Clara, California-based firm rose more than 4 percent in early Friday trading, before dropping back to close the day up 0.4 percent, with a valuation of about $1.97tn.

Nvidia reached a $1tn valuation less than a year ago, in May 2023.

On Wednesday Nvidia said its net profit for the fourth quarter ended 28 January rose a staggering 769 percent to $12.3bn, up from $1.4bn for the same quarter a year earlier.

Tech ‘tipping point’

Full-year profits rose 581 percent year-on-year to $29.8bn, while revenue for the year rose 126 percent to $60.9bn.

Revenue from data centres, a key indication of Nvidia’s strength in AI, grew by more than 400 percent in the fourth quarter to $18.4bn.

Chief executive Jensen Huang told investors on the earnings call that demand was “surging” around the world and that technology for generative AI was at a “tipping point”.

Nvidia’s shares have more than tripled over the past 12 months, from less than $240 to its close of $788 on Friday.

On Thursday, the day after its earnings report, heavy demand for Nvidia’s shares increased the firm’s value by $277bn, in Wall Street’s biggest one-day gain in history.

‘Transformational’

The company’s shares have risen by more than 60 percent since the beginning of 2024 alone.

Nvidia helped the benchmark S&P 500 clear 5,100 for the first time during early Friday trading, before slipping back, but the S&P and Dow Jones industrial average both ended the week at new record highs.

The company’s results surpassed already high expectations from analysts, who continued to voice their enthusiasm for Nvidia’s AI prospects.

“The AI revolution starts with Nvidia and in our view the AI party and popcorn is just getting started,” said Wedbush analyst Dan Ives in a reasearch note.

He added that AI is a “transformational tech trend we have not seen since the start of the internet in the mid-90s”.