Nvidia is now the most valuable US chipmaker
Nvidia’s share price has rallied over 30% since the start of June 2020, with investors keeping bullish on the stock even amid concerns of a global recession.
A month later, the gaming-focused graphics processing unit (GPU) producer was even able to overtake Intel for the first time to become the most valuable US semiconductor company (and third globally) by market capitalisation.
Nvidia’s share price also topped the US$400 mark for the first time that month. More rallies followed after, taking price to a current all-time high of US$468 per share and market cap to US$285 billion.
Analysts said the stock’s steady rise in the last few months can be attributed to two main factors – solid fundamentals and a strong outlook.
Despite disruptions caused by the Covid-19 pandemic, the company was able to post strong revenue and earnings performance in the first quarter of its 2021 financial year. The company’s adjusted revenues of US$3.08 billion, for instance, outdid Zacks Equity Research’s consensus estimate by 2.8% and rose 38.7% year-on-year.
Growth opportunities provided by Nvidia’s expanding data centre and gaming business segments, are also proving to be major catalysts of the company’s latest share price rally.
Data centre revenue grew to approximately US$3 billion in the 2020 fiscal year, up from US$317 million in 2015. With more businesses moving to cloud solutions, demand for data centres – which in turn is driving demand for GPUs are expected to increase even more.
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