Nvidia is on the cusp of reaching a staggering $4 trillion market capitalization, with shares trading around $158 each, just shy of the threshold at $163.93 per share. Jim Cramer notes that Nvidia’s value extends far beyond a conventional semiconductor company, attributing its market standing to its intricate combination of hardware and software that together create a robust platform for artificial intelligence computing. He states that if Nvidia were merely a semiconductor business, its stock would be valued significantly lower.
The driving force behind Nvidia’s surge in value has been its crucial role in the rise of generative AI, highlighted by the launch of ChatGPT at the end of 2022, which sparked an increased demand for Nvidia’s graphics processing units (GPUs). This demand has led to an explosion in sales, profits, and consequently, stock price. Despite facing geopolitical challenges earlier this year, where Cramer advised caution, Nvidia’s standing was bolstered when significant customers reaffirmed substantial capital expenditures as trade tensions eased.
Cramer also notes that industry peers share his optimistic outlook for Nvidia, as evidenced by Citi raising its price target to $190 per share, fueled by solid projections for the AI chip market by 2028. The increasing global demand for AI applications has positioned Nvidia well, especially with new opportunities emerging outside the U.S., exemplified by a substantial deal with an AI startup backed by Saudi Arabia’s sovereign wealth fund. Mizuho Securities has also increased its price target based on anticipated improvements in Nvidia’s supply chain that may boost availability of its latest AI chip generation.
Nvidia’s evolution into a comprehensive AI platform, incorporating both hardware and software, suggests that its growth trajectory may not only continue but also expand into new markets, fostering a strong sense of optimism about its future.