NVIDIA hits record high, poses threat to Apple's top position
What's the story
NVIDIA, the top artificial intelligence (AI) chipmaker, looks poised to dethrone Apple as the world's most valuable company. The firm's shares hit an all-time high on Monday, closing at $138.07 after a 2.4% rise. The surge was driven by investor confidence in the strong demand for NVIDIA's current and upcoming AI processors.
Market standings
NVIDIA's market value surpasses Microsoft, trails Apple
With a market value of $3.39 trillion, NVIDIA sits just below Apple's $3.52 trillion and above Microsoft's $3.12 trillion. Back in June, NVIDIA briefly became the world's most valuable company before losing the title to Microsoft. The market capitalizations of these tech giants have been closely contested for months now, with NVIDIA now looking to dethrone Apple from the top spot.
AI dominance
NVIDIA leads in AI technology race
NVIDIA has become Wall Street's biggest winner in the race to dominate emerging AI technology, outpacing giants like Alphabet, Microsoft, and Amazon. TD Cowen analysts observed in a recent report that "We believe the major companies in AI... face an investment environment characterized by a Prisoner's Dilemma — each is individually incentivized to continue spending, as the costs of not doing so are (potentially) devastating."
Price projection
TD Cowen maintains high price target for NVIDIA
TD Cowen has kept its lofty price target of $165 for NVIDIA shares, calling it their "Top Pick." The firm also reiterated that demand for NVIDIA's current generation of AI chips continues to be strong. Even though the production ramp-up of its upcoming Blackwell chips has been pushed back to Q4, NVIDIA has downplayed any negative impact, claiming customers are eagerly buying existing chips.
Market impact
Tech giants' performance boosts S&P 500
As the quarterly reporting season nears, both Apple and Microsoft have gained nearly 2% and 0.7%, respectively. This has pushed the S&P 500 up by 0.8%, taking it to a record high close. NVIDIA, Apple, and Microsoft together make up about one-fifth of the S&P 500's weight, which is why they have such a strong impact on the index's daily gains and losses.
Financial outlook
TSMC's profit forecast and NVIDIA's revenue projections
Taiwan Semiconductor Manufacturing Co (TSMC), the contract manufacturer that makes NVIDIA's processors, is expected to report a 40% jump in quarterly profit on Thursday amid high demand. Spending on AI data centers could even double NVIDIA's annual revenue to nearly $126 billion, analysts say, according to LSEG data. However, investors worry this optimism could fade if there's a sign of slowdown in technology spending.