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Nvidia Faces Early Trading Retreat Following Market High
Nvidia saw a pullback in its stock price early Thursday after reaching a significant milestone. The company briefly hit a $3 trillion market cap, surpassing Apple as the second-most-valuable firm in the US stock market. Nvidia’s stock opened at $1,240.09 per share but experienced a 0.4% decline soon after. The leader in market cap remains Microsoft.
The recent surge in Nvidia’s stock is part of a broader technology sector rally, influenced by falling Treasury yields and gains in the tech market. Investor excitement surrounding artificial intelligence, spurred last year by OpenAI’s ChatGPT, has propelled Nvidia’s stock by over 140% this year and 200% over the past year. The company’s shares have skyrocketed more than 3,300% in the past five years, dwarfing the Nasdaq's gains of 14%, 29%, and 126% over the same periods.
This week's Nvidia rally also follows comments from CEO Jensen Huang, who, at an industry conference, announced plans for a high-performing Blackwell chip — the Blackwell Ultra — set for 2025, and a new AI chip platform called Rubin slated for 2026 with its Ultra version expected in 2027. Nvidia remains the preferred supplier of AI chips and software, used by tech giants such as Amazon, Google, Meta, Microsoft, and Tesla for both their cloud-based AI products and internal AI services.
In its latest earnings report, Nvidia boasted adjusted earnings per share of $6.12 on revenues of $26 billion. These figures represent significant year-over-year increases of 461% in earnings and 262% in revenue. The company’s Data Center revenue surged to $22.6 billion, making up 86% of the total earnings for the quarter. Meanwhile, Nvidia’s gaming segment saw revenues of $2.6 billion.
Nvidia is set to undergo a 10-for-1 stock split on June 7 and will raise its dividend from $0.04 per share to $0.10 per share. However, Nvidia faces growing competition. AMD has unveiled plans for its MI325X and MI350, entering the market in 2024 and 2025, respectively, along with a next-gen MI400 AI accelerator platform aimed for 2026. Intel also plans to compete by pricing its Gaudi 2 and Gaudi 3 AI accelerators more competitively. With massive investments in AI chips, cost-saving measures are likely to appeal to buyers.
Adding to the competitive pressure, Nvidia’s major clients like Amazon, Google, and Microsoft are exploring ways to reduce their reliance on Nvidia’s chips to cut capital expenditures. Despite these emerging challenges, Nvidia maintains a strong position in the AI chip market, continuing its dominance in the sector.
