Nvidia to win race to $4 trillion market, experts say

Buy a dive.

That was the sentiment about chip stocks last week as investors piled on shares straight away, sending Nvidia (NVDA) to a record high. Strong sentiment for Taiwan Semiconductor (TSM) was enough to stoke Wall Street’s enthusiasm for artificial intelligence as growing confidence in the AI ​​boom overshadowed ASML’s dovish outlook for the supplier and reports of copies of advanced AI equipment in other Middle Eastern countries.

Nvidia closed the week higher at $138 a share, bringing its market value to $3.39 trillion. The stock was trading up 0.2% in early Monday trading.

It is now the second largest company in the world after Apple (AAPL). But that may not last long. Experts I spoke to last week say there is growing confidence that the chip giant will be the first Big Tech firm to reach a $4 trillion valuation.

“There’s no question about it,” Ram Ahluwalia, CEO of Lumida Wealth Management, told me on Yahoo Finance’s Catalysts (video above). “Demand for GPU chips is strong, and you’re seeing startups getting ROI.”

Nvidia CEO Jensen Huang sparked a stock rally earlier this month after describing demand for Blackwell’s new chips as “ridiculous.”

Despite the stock’s strong performance, T. Rowe Price portfolio manager Tony Wang told me that investors “continue to underestimate” Nvidia’s growth. He sees the “special” need for AI making it “certainly possible” for the chip giant to cross the $4 trillion mark first.

In the coming weeks, earnings from other Magnificent Seven companies will give investors better insight into Nvidia’s market dominance. Meta (META), Amazon (AMZN), Alphabet (GOOG, GOOGL), and Microsoft (MSFT), which accounts for more than 40% of the chipmaker’s revenue, have all pledged to continue investing in AI.

Last quarter, spending by Meta, Alphabet and Microsoft was more than $40 billion, while Amazon said spending in the second half of the year will exceed $30 billion spent in the first half.

BofA analyst Vivek Arya, who sees Nvidia as a “generational opportunity,” cites the explanation of capital spending from high-end hyperscalers among the reasons he sees Nvidia “strengthening its position.”

Arya raised his price target on the chipmaker to $190 last week, implying a rally of about 40% from Friday’s closing price.

Arya and his team also cited Taiwan Semiconductor’s strong demand outlook as positive. TSMC – a major supplier for Nvidia and other giants, including Apple – sparked a sector-wide rally after posting a more than 50% increase in revenue for the third quarter and reporting the highest revenue growth for the year total of about 30%.

The story continues

It’s safe to say, Big Tech’s third quarter numbers will be a key test for Nvidia and the key to the stock’s momentum in the short term. Any disappointment in AI usage plans could lead to volatility for Nvidia and the broader chip market.

But if that happens, the sale may not last long. Niles Investment Management founder Dan Niles recently told me on Yahoo Finance’s Opening Bid podcast that he is holding on to Nvidia’s long-term prospects.

“You have a few more years of investment in AI before you get to saturation or a growing AI space,” Niles said. “You’re going to see Nvidia’s revenue double in the next few years, and I think you’re going to see the stock double in the next few years.”

Shares of Nvidia have risen 21% so far this month, bringing its gains to 179% year to date.

Sean Smith I am an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist positions, or anything else? Email seanasmith@yahooinc.com.

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