Nvidia, the chipmaker, has surpassed Alphabet to become the third most valuable company in the US. Its shares have risen by 3.64% in the past five days, resulting in a market cap of $1.83 trillion, slightly higher than Alphabet's $1.82 trillion. This increase in valuation places Nvidia behind only Microsoft and Apple. The company's stock has been performing well, with a 51% increase this year alone. Furthermore, on Monday, Nvidia's market cap surpassed that of Amazon for the first time since 2002.
The surge in Nvidia's value can be attributed to the boom in artificial intelligence (AI), which has driven up demand for semiconductors. Nvidia is a major player in the chip industry and has benefited greatly from this increased demand. Its rise in valuation is so significant that it now exceeds that of China's stock market and is even worth Spain's entire GDP.
The AI hype has also impacted other tech stocks, such as ARM, which has seen an 81% increase in the last month. The iShares Semiconductor ETF has also experienced a 10% rise since mid-January.
Analysts believe that there is still potential for Nvidia's stock to increase further. Bank of America predicts that the share price could reach $800, citing the yet-to-be-realized adoption of enterprise genAI. Currently, the stock is valued at around $725.
However, some experts have expressed concerns about the sustainability of Nvidia's success. Rob Arnott has compared the company's gains to those of a dot-com era stock and warns that when the bubble bursts, it could trigger a wider market rout.
In summary, Nvidia's increase in valuation has led it to surpass Alphabet and Amazon, making it the third most valuable company in the US. The surge in demand for semiconductors due to the AI boom has propelled Nvidia's stock, but there are concerns about the sustainability of its success.