Credit：Nvidia
As of Tuesday close, Nvidia shares nearly 183% to the year date, driven by strong demand for its graphics processing units (GPUs) that have been the backbone of the artificial intelligence (AI) revolution. Apple shares rose approximately 16% this year.
This is the second time for Nvidia to become the most valuable public company. Nvidia overtook Microsoft with a market value of $3.34 trillion on June 18 after the company first hit $3 trillion earlier that month, joining Microsoft and Apple that club. The latest advancement of market value highlighted how upbeat investors feel about outlook of Nvidia amid the AI boom.
Nvidia shares broke their record on October 21 after its key partner Taiwan Semiconductor Manufacturing Co. (TSMC) posted stronger-than-anticipated quarterly earnings. TSMC revenue for the quarter ended September 30 gained 39% year-over-year (YoY) to 759.69 billion New Taiwan dollars (NT$759.69 billion), or US$23.5 billion with a 36% YoY rise, topping the company's previous forecast of US$22.4 billion to US$23.2 billion. The net income for the third quarter surged 54.2% YoY to a quarterly record of NT$325.26 billion, better than analysts’ estimated NT$300.2 billion.
TSMC delivered more optimistic outlook following the financial results. It now expects revenue for the year 2024 to grow close to 30% in U.S. dollar terms, upgrading from its previous guidance of slightly above the mid-20% range. It said revenue from AI processors is set to account for mid-teens percentage of its overall revenue this year.
"The demand is real," Chairman and CEO C.C. Wei told an earnings call, referring to AI and adding it would last for many years. As a result, TSMC has has experienced the “deepest and widest growth of anyone in this industry,” Wei said. “We have talked to our customers all the time, including our hyperscaler customers who are building their own chips. And almost every AI innovator is working with TSMC,” said Wei.
The Wall Street stayed upbeat on Nvidia following TSMC earnings beat. Bank of America (BofA) analysts, led by Vivek Arya, lifted their price target for Nvidia to $190 from $165 last Thursday, implying it could rise 38% from Friday’s close. The analysts reiterated their buy rating on Nvidia, calling it a “top AI pick” and a "generational opportunity," estimating a total addressable market of more than $400 billion for AI accelerators.
The BofA analysts pointed to recent comments from Nvidia CEO Jensen Huang, who said that demand for the company's Blackwell AI chips is “insane” in an interview with CNBC earlier this month. "AI models (demand) continue to evolve, with the cadence of new LLM model launches now increased to 3-5 times/yr per developer (OpenAI, Google, meta, etc.), and each new major generation requiring 10-20x compute requirement to train," analysts said.
