Nvidia's stock price hit its highest closing level in history again after four months on Monday (October 14). This irreplaceable chip manufacturer in the AI ​​era seems to be on track to surpass Apple again and become the world's most valuable company.


Nvidia shares rose 2.4% to close at $138.07 on Monday as investors bet that its current and next-generation AI chips will continue to experience strong demand. The latest gains push Nvidia's market capitalization to $3.39 trillion, slightly less than Apple's $3.52 trillion but higher than Microsoft's $3.12 trillion.


Note: The blue line is NVIDIA stock trend, and the dark green line is Apple.

In June of this year, Nvidia once surpassed Microsoft and Apple and became the company with the highest market value in the world. Later, although Apple returned to the top, the market value of the three technology giants has actually been about the same in the past few months. Nvidia, Apple and Microsoft account for about one-fifth of the S&P 500's weighting, so their performance has a large impact on the index's daily gains and losses.

Currently, Nvidia has risen nearly 14% this month, and it is still the second-best performing stock in the S&P 500 Index during the year.

In the fierce competition among Google, Microsoft, Amazon and other major technology companies to compete for emerging artificial intelligence technologies, Nvidia, which plays the role of "shovel seller", has suddenly emerged and become the biggest winner on Wall Street. "We believe the major companies in the AI ​​space ... face a prisoner's dilemma investment environment - each company has an incentive to continue spending because the costs of not doing so (could be) devastating," TDCowen analysts wrote in a report on Sunday.

And behind this game, it is obviously beneficial to Nvidia. TDCowen recently reiterated its target price of $165 for Nvidia, calling it the "top choice" for investment and saying that market demand for the company's current generation of AI chips remains strong.

The market still has full confidence in Nvidia

Nvidia in August confirmed reports that production ramp-ups for its upcoming Blackwell chips would be delayed until the fourth quarter, but downplayed the impact and said customers were snapping up existing chips. Nvidia CEO Jensen Huang stated earlier this month that Nvidia's Blackwell chips are "in full production" and that market demand is "very crazy."

A report issued by Morgan Stanley analysts after meeting with management last week said orders for Blackwell chips "are already in the pipeline for about 12 months" and "all signs point to business remaining strong and the outlook very bright."

The comments solidify the view that Nvidia remains a top choice for investing in AI, especially as major companies remain committed to their AI initiatives. For example, Microsoft Corp. is expected to increase capital spending by nearly a third in fiscal 2025, to about $58 billion, according to an average of analyst estimates compiled by the outlet.

Zehrid Osmani, portfolio manager at MartinCurrie Investment Management, said: "People have questioned the possible impact of (Blackwell chip) production delays, so these new developments are reassuring."

In addition to optimism about the Blackwell chip itself, TSMC's recent sales also show strong demand for AI chips, while a new round of financing from OpenAI has valued the company at $157 billion. OpenAI also recently released an artificial intelligence model with inference capabilities (Google is also working on a similar model).These good news in the AI ​​and chip fields have also indirectly boosted people's confidence in Nvidia's prospects.

On Monday, other AI chip and hardware stocks in the U.S. stock market, such as ARM, Qualcomm, Broadcom, AMD and Micron, also rose. TSMC's stock price hit a record closing high with Nvidia on Monday.

GabelliFunds portfolio manager John Belton said these events have "renewed interest in the AI ​​space and there is a lot of excitement about use cases for inference-based AI. Inference represents a new area for Nvidia and when you consider how compute-intensive it is, this could be a huge new product category."

Belton continues to view Nvidia as a core holding and believes that AI will bring "steady demand" over a multi-year span. "This is not an undiscovered stock, but if it can deliver on the numbers expected, the valuation is still reasonable."

It is worth mentioning that the options market has recently been flashing signs of optimism about Nvidia's prospects. Last Thursday, there was a wave of buying Nvidia call options. Call option holders can buy more than 30 million Nvidia shares in March next year at prices between $150 and $189. This range is 8.6%-36.9% higher than Nvidia's closing price on Monday.

Analysts currently expect Nvidia's revenue to more than double this fiscal year and grow another 44% next fiscal year, according to data compiled by industry media. Over the past quarter, the market has continuously raised its expectations for Nvidia's earnings and profits.

Nvidia's strong profit growth prospects make its valuation metrics less alarmingly high, which actually helps bulls continue to buy.The company's forward price-to-earnings ratio is currently about 37 times, which does represent a premium compared to the Nasdaq 100 Index, but it is below Nvidia's five-year average and below its peak forward price-to-earnings ratio of more than 44 times in June.