Nvidia share price juggernaut will not be stopped easily
ft.comFeb 08
Nvidia Briefly Becomes World's 2nd-Most Valued Firm
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The Facts
US artificial intelligence (AI) chip maker Nvidia's market value rose 5% Wednesday to $3.01T, temporarily surpassing Apple as the world's second-most valuable company. After skyrocketing at the market's opening, it then dropped 0.4% back to third place.
The company's stock price jump came amid reported preparations to split it 10-for-one this coming Friday, potentially making it more attractive to individual investors.
The Spin
Narrative A
Nvidia's meteoric rise exemplifies the volatility in predicting new tech markets. While uncertainties remain over future chip demands and competitive pressures from giants like Microsoft and Amazon, Nvidia's strong developer tools enhance its position. Even though Wall Street predicts a revenue growth slowdown, Nvidia's key role in AI remains unmatched.
Narrative B
At such high valuations, a fall in Nvidia's share price is both inevitable and imminent. At the very least, it will not be able to sustain such a rockstar performance for too long. As Nvidia is currently trading at almost 90 times its earnings, investors will serve themselves well by applying caution and keeping in mind that markets are cyclical.