Nvidia Corp. shares surged to their first record high in months on Friday, reflecting renewed momentum for the leader in artificial intelligence chips. The stock gained 4.3 percent to close at US$208.26, surpassing the previous record set in October. This breakout comes after a period of consolidation, with the stock having fallen 20 percent from its October peak just four weeks ago.
Market Cap Surpasses $5 Trillion
The rally pushed Nvidia's market capitalization above US$5 trillion, solidifying its position as the world's most valuable company. The stock is up 12 percent year-to-date and has been the largest contributor to the S&P 500 Index's 4.7 percent gain, accounting for roughly 20 percent of the index's advance, according to Bloomberg data.
AI Spending Fuels Optimism
Investor enthusiasm is driven by expectations that massive spending on AI computing infrastructure will continue, fueling long-term growth for chipmakers. "The amount of money being spent on AI is incredible, and we haven't seen signs of it slowing down," said Paul Nolte, market strategist at Murphy & Sylvest Wealth Management. "Within that context, it's not surprising to see Nvidia as a star as we see a run back to tech."
Big Tech stocks have rallied over the past four weeks after lagging the broader market earlier this year, as investors seek stability and strong earnings amid geopolitical tensions. The Philadelphia semiconductor index has gained for a record 18 consecutive sessions, rising 47 percent over that period, aided by strong results from Texas Instruments and Intel.
Outlook Depends on Big Tech Earnings
More clarity on AI spending will come next week when Wall Street reviews quarterly results from the four biggest spenders: Microsoft, Amazon, Alphabet, and Meta Platforms. "I'm waiting for those results to get more clarity on the spending outlook, but otherwise there's plenty of reason to be optimistic about Nvidia's prospects," Nolte added.
The semiconductor rally underscores the market's confidence in AI-driven growth, with Nvidia at the forefront of this transformative trend.
