The unexpected financial report provided strong support for the astonishing stock price increase of AI (artificial intelligence) chip leader Nvidia.
On February 22, local time, the second day after the financial report, NVDA's stock price opened high and continued to rise, recovering from the previous days' decline. It rose 16.4% and closed at $785.38 per share, reaching a new high. The total market value reached $1.96 trillion, an increase of $277 billion (approximately RMB 1.99 trillion), surpassing Amazon and Google's parent company Alphabet, becoming the second largest market value after Microsoft ($3.06 trillion) And Apple ($2.85 trillion) is the world's third-largest technology giant.
Nvidia also set a record for the highest increase in market value on a single trading day in the US stock market, equivalent to an increase in the market value of one Coca Cola ($263.7 billion) per day, breaking the record for a single day market value increase of $19.7 billion set by Meta on February 2 of this year.
On the 22nd, driven by NVIDIA, a group of technology stocks saw an increase: NVIDIA's competitor AMD's stock price surged by more than 10%, Micron Technology's stock price rose by 5.4%, and US server manufacturer Super Micro Computer's stock price surged by more than 30%, comparable to the single day surge in meme stocks in 2021. Led by Nvidia and a group of technology stocks, the three major US stock indexes all closed strong on the day, with the Dow Jones and S&P 500 reaching historic highs. After market hours, Nvidia remained strong with an increase of over 1.7%.
Foreign media pointed out that these large gains have broken the market's pessimistic predictions about the US stock market and demonstrated that the "seven giants" of the US stock market can still drive the market higher. The seven giants, including Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla, continued to rise at the beginning of 2024, adding a total market value of about $500 billion on the 22nd alone, marking the largest daily increase since 2022.
According to data from JPMorgan Chase, this surge has prompted many investors to abandon their bearish bets on these tech giants.
Nvidia's performance also led to its CEO Huang Renxun's net worth skyrocketing by $9.59 billion in a single day. With a total net worth of $69.2 billion, he rose two places on the Bloomberg Billionaires Index and reached 21st place. This year, his net worth increased by $25.2 billion, surpassing China's richest man Zhong Renxun ($66.3 billion). At the beginning of last year, Huang Renxun ranked 128th on the list with a net asset of only $13.5 billion.
As one of the most direct beneficiaries of the AI boom, Nvidia achieved a revenue of $22.103 billion in the fourth quarter of the 2024 fiscal year as of January 28, a year-on-year increase of 265%, far exceeding the expected $20.37 billion.
The excellent performance of NVIDIA's core business data center has supported the rapid growth of total revenue. In that quarter, data center revenue reached $18.4 billion, five times higher than the same period last year. Nvidia predicts that its data centers will continue to grow in this quarter, with the potential to double compared to the same period last year, and its data center infrastructure will double in size within five years.
Although there are concerns that the proportion of cloud vendor customers in the revenue composition of data centers is too high, and several giants have stated that they have started developing their own chips, this does not seem to bring too much fluctuation to Nvidia's performance. At the financial report, several companies, including Microsoft, Amazon, Google's parent company Alphabet, and Meta, told investors that they plan to increase capital investment in the AI field this year to purchase AI components provided by Nvidia.
According to research firm Omedia, Nvidia currently holds over 70% of the global AI chip market share. Despite facing increasingly fierce competition, Nvidia still has confidence in not lowering prices due to the supply shortage.
Huang Renxun stated during a conference call that the overall supply relationship is improving, but products are still in short supply, and supply restrictions will continue throughout the year. Nvidia is troubled by how to supply chips to customers in a "fair manner". In addition, it is expected that the upcoming next-generation architecture (Blackwell) products will also face tight supply.
The financial report also shows that Nvidia's operating profit for the quarter was close to $14.8 billion, with an operating profit margin of 67%, which is the highest level for the company in at least a decade. Nvidia predicts that its operating profit margin will remain at this level in the next fiscal quarter.
What is even more inspiring to investors is a statement written by NVIDIA CEO Huang Renxun in his financial report, stating that "accelerated computing and generative AI have reached the tipping point.". Meanwhile, Nvidia has provided guidance on its performance for the next quarter, predicting sales of $24 billion in the first quarter of fiscal year 2025, with a 2% fluctuation, far exceeding Wall Street's expectation of $22.12 billion.
Due to Nvidia generally only providing a quarterly performance forecast, investors may sometimes have doubts about the growth trend of its AI business. In this unprecedented AI craze, there are also various speculations about where Nvidia's business will ultimately go.
Some investors have expressed a more cautious attitude towards this AI frenzy. In recent trading days, the activities of the stock and option markets in all aspects have shown that capital is extremely optimistic about this technology, which has triggered people's concern about AI's emergence of foam.
Data shows that some futures traders have even set a target price for the stock at $1300, almost twice the current data, which means Nvidia's market value will far exceed $3 trillion, surpassing the current two tech giants Microsoft and Apple. The highest target price set by Wall Street for Nvidia is $1200, set by investment bank Loop Capital last Friday.
The Wall Street Journal pointed out that Nvidia's biggest challenge in the near future may be how to manage those expectations that are closely related to its rapid growth. This wave of AI prosperity is unprecedented, so there are various speculations about where Nvidia's business will ultimately go.