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Unveiling Nvidia’s Ascendancy: The AI Revolution and Market Dynamics

8th February, 2024| By Business Desk
NVIDIA
NVIDIA Building | Credit: The Brand Hopper
  • Wall Street’s interest in AI has propelled Nvidia to the brink of surpassing Amazon in market value for the first time in two decades.
  • Nvidia’s stock surged by 40% in 2024, reaching a market capitalization of $1.715 trillion, just 3% below Amazon’s valuation and less than 6% below Alphabet’s.
  • Optimistic reports from Morgan Stanley led to a further increase in Nvidia’s stock, with a price target raised to $750 from $603 due to continued demand for AI technologies.
  • Nvidia’s pivotal role in catering to the rising demand for AI integration has solidified its position as the fifth most valuable company in the US stock market.
  • In parallel, Microsoft surpassed Apple to become the world’s most valuable company, while Saudi Aramco remains a significant player with a $2 trillion market capitalization, albeit primarily government-owned.

Wall Street’s growing interest in artificial intelligence (AI) has significantly impacted the market dynamics, particularly for Nvidia (NVDA.O), positioning the AI chipmaker on the brink of surpassing Amazon (AMZN.O) in market value for the first time in two decades. Nvidia’s stock has experienced a remarkable surge of 40% in the year 2024, propelling its market capitalization to $1.715 trillion as of mid-day trading on Wednesday. This places Nvidia’s market value just 3% below Amazon’s $1.767 trillion valuation and less than 6% below Alphabet’s (GOOGL.O) $1.812 trillion value, according to data from the London Stock Exchange Group (LSEG).

The optimistic trajectory of Nvidia’s stock received a further boost following an encouraging report from Morgan Stanley, which led to a 1.8% increase in Nvidia’s shares, reaching $694.48. Analyst Joseph Moore, in a client note, raised the price target for Nvidia to $750 from $603, attributing this adjustment to the continued surge in demand for AI technologies.

Nvidia’s remarkable performance in 2024 follows its exceptional growth in the previous year, where its stock value tripled, elevating the company to the fifth position among the most valuable companies in the US stock market. The company’s success can be largely attributed to its pivotal role in catering to the rising demand for AI integration in various products and services offered by technology giants such as Meta Platforms (META.O) and others, who have heavily invested in Nvidia’s graphics processors.

The growing demand for Nvidia’s processors is evidenced by the prolonged waiting lists faced by AI developers seeking access through cloud-computing providers. However, Morgan Stanley’s Moore noted that these wait times are gradually decreasing, indicating a positive outlook for Nvidia’s market expansion.

Nvidia’s potential to surpass Amazon in market value harks back to 2002 when both companies were valued at under $6 billion. This imminent milestone underscores Nvidia’s resurgence and solidifies its position as a key player in the AI industry.

In parallel developments within the technology sector, Microsoft (MSFT.O) recently surpassed Apple (AAPL.O) in January to become the world’s most valuable company. Beyond these frontrunners, the list of the world’s most valuable publicly-listed companies includes state oil giant Saudi Aramco (2222.SE), Alphabet, and Amazon.

Saudi Aramco boasts a substantial market capitalization of $2 trillion, positioning it as the third most valuable publicly listed company globally. However, it’s important to note that the majority of Saudi Aramco is government-owned, with less than 2% of its shares available for trading by investors, as per LSEG data. This distinction highlights the unique market dynamics and ownership structure of Saudi Aramco amidst the backdrop of evolving global economic landscapes.