The highest price target valued it at about $1.6 trillion, on par with Google-parent Alphabet.
"While the company's valuation looks lofty at the moment, we think Nvidia has the earnings firepower as the adoption of its AI GPU remains in the very early innings," Kinngai Chan, senior research analyst at Summit Insights Group, said.Big Tech companies have shifted focus to AI on hopes the technology will attract demand. The computers that power generative AI run on powerful chips called graphics processing units - of which 80% are produced by Nvidia, according to analysts.
OpenAI-owned ChatGPT's rapid success has prompted tech giants such as Alphabet and Microsoft to make the most of generative AI. Nvidia, led by CEO Jensen Huang, has pivoted to the data center market over the last few years after years as a powerhouse in videogame chips. The company's business rapidly expanded during the pandemic when gaming took off, cloud adoption surged and crypto enthusiasts turned to its chips for mining coins. Huang's bet on AI is expected to fuel growth in the coming months.Despite the sky-high valuation, analysts believe Nvidia's AI chips business has room for growth as generative AI technology is still at a nascent stage with wide adoption expected in the years to come.
Last week alone, Nvidia's shares rose about 25%, sparking a rally in AI-related stocks and boosted other chipmakers. That helped the Philadelphia SE Semiconductor index"Technical traders and AI mania have pushed Nvidia toward the $1 trillion cap and it is not inexpensive," said Jim Kelleher, analyst at Argus Research.
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