(News Bulletin 247) – The specialist in graphics processors continues its irresistible rise on the stock market, with a capitalization which now stands at $2,131 billion.

And to think that just a year ago Nvidia was not even worth $1,000 billion… The graphics processor specialist reached a new stage in its irresistible stock market rise on Monday evening.

The group co-founded in 1993 by Jensen Huang gained 3.6% on Monday on Wall Street, defying the prevailing gloom (the Nasdaq lost 0.4%). This new increase brings its increase to 72% over the whole of 2024 and more than 265% over one year.

Above all, it allows Nvidia, for the first time, to climb onto the podium of the largest market capitalizations in the world. With $2.131 billion (the total value of the group’s shares), Nvida has now surpassed Saudi Aramaco ($2.064 billion), according to data from companiesmarketcap.com. Only Apple ($2.774 billion) and Microsoft ($3.087 billion) are now ahead of Nvidia.

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Rise of AI

Since the launch of the ChatGPT chatbot in November 2022, Nvidia has seen demand for its graphics processing units (GPUs) soar. Initially used to improve the graphics quality of video games, these GPUs have become essential to provide sufficient computing power to train the large language models present in generative artificial intelligence (AI).

As a result, Nvidia’s business literally exploded. In its last published financial year, its revenues jumped 126% to $60.9 billion, with an increase of 265% in the fourth quarter alone. The company’s outlook showed that the train is far from slowing down: in the first quarter of its current fiscal year, Nvidia expects revenues of $24 billion, an increase of 233% compared to the same period of the previous fiscal year. . This publication, delivered two weeks ago, allowed the stock to gain 16% over one session.

Nvidia’s stock market explosion fascinates as much as it worries and many observers draw a parallel between its rise and that of Cisco, which saw its share price jump 236% between early 1999 and March 2000 before collapsing.

Anything but a bubble?

But experts emphasize that Nvidia’s stock market progression has the virtue of being linked to its fundamentals and the surge in its revenues, which was not the case for companies in the internet bubble.

“To the extent that we covered tech stocks during the ‘bubble.com’, we can say that this has nothing to do with the 1999/2000 period. Indeed, the high valuations, the lack of monetization and “Infrastructure, fragile balance sheets, troubled business models and the macroeconomic environment were completely different then than today,” argues Wedbush’s Dan Ives.

“As earnings accelerate, the perception of a bubble around Nvidia has shifted. Before last year’s influential first quarter numbers, the stock was trading at around 65 times However, at the start of 2024, it was trading at around 25 times earnings,” explains Stephen Innes of Spi Asset Management.

“Even after the strong year-to-date rise prior to Q4 results, Nvidia was still trading at “only” 33 times earnings. While not cheap, this situation does not match the criteria of a real bubble,” he adds.

The average price target of analysts compiled by investing.com leaves only limited potential for Nvidia ($890 or 4%). But out of 55 analysts, 50 have a buy advice or equivalent. It is therefore very likely that research firms will review their forecasts in the coming weeks.