Nvidia has once again made headlines following announcements from the globe’s three largest cloud service providers, along with Meta Platforms, that they plan to increase their spending to stay competitive in the artificial intelligence arms race. This surge in investment is expected to benefit Nvidia significantly, which has seen its stock value rise sharply.
On Monday, Nvidia’s stock soared 4%, reaching an all-time high and pushing the company’s market valuation to approximately $5.12 trillion. This follows a historic milestone achieved last Wednesday when the stock broke the $5 trillion mark for the first time. Over a mere three trading days, the company gained nearly $100 billion in market capitalization. Loop Capital, in a note to clients, has now raised its price target for Nvidia to $350 per share from $250, anticipating that the company’s GPU shipments will effectively double within the next 12 to 15 months. The analysts believe this growth is coupled with an increase in average selling prices and networking.
The note from Loop Capital preceded two significant developments for Nvidia. First, Microsoft announced it had obtained export licenses to send Nvidia chips to the United Arab Emirates. In a separate announcement, Amazon revealed a $38 billion commitment from OpenAI to leverage AWS for additional computational power, tapping into hundreds of thousands of Nvidia GPUs. Microsoft’s Azure and Google Cloud rank as the second and third largest cloud services, respectively.
Additionally, the South Korean government and leading corporations such as Samsung and Hyundai are collaborating with Nvidia to enhance the nation’s AI infrastructure. They plan to deploy over a quarter-million Nvidia GPUs across governmental and industrial data centers, laying a foundation for AI-driven economic growth in sectors including automotive, manufacturing, and telecommunications.
These moves are underscored by the increasing recognition that access to AI infrastructure is not just a competitive advantage for businesses, but also a crucial national security concern. As businesses and nations vie for dominance in a data-driven landscape, it is essential for governments to secure supplies of advanced computing technologies.
Despite the impressive rally tied to AI stocks, analysts caution that not all firms in this sector are generating earnings or sales, and therefore, investors should tread carefully in speculative markets. While acknowledging the gains attributed to developments in AI, it is advised that investors maintain positions in quality stocks like Nvidia, as the company’s trajectory indicates it still has significant growth potential ahead.
