The valuation gap is closing between two of America’s largest Big Tech megacaps.
Following the annus mirabilis that was Nvidia Corp’s 2023, the fabless semiconductor designer is in touching distance of Amazon.com Inc (NASDAQ:AMZN, ETR:AMZ)’s status as the US’s fourth-largest company by market capitalisation.
And with Nvidia’s quarterly results due in the coming weeks, that gap could very well be closed.
Nvidia has set a fourth-quarter revenue target of around $20 billion on a 74.5% gross margin.
Achieving this would make for another all-time quarterly record following an $18.1 billion top-line figure in the third quarter and $13.5 billion in the second quarter.
It would also make for a 230% year-on-year increase against the $6.05 billion in revenues in the fourth quarter of fiscal 2023.
These numbers alone are impressive, but Nvidia has a propensity to exceed even the highest of internal and external guidance.
The group famously beat second-quarter 2023 guidance by $2.5 billion (make that $4 billion when going by Street guidance), a record beat in the semiconductor industry, before smashing third-quarter guidance by $2 billion once again.
Unsurprisingly, Nvidia shares took off like a rocket, more than tripling in value by the time 2023 came to a close, with the fabulous fabless chipmaker taking a comfortable seat in the trillion-dollar club.
Year to date, Nvidia has rallied another 45%.
These remarkable gains are all down to Nvidia’s prominent position in the artificial intelligence (AI) sector, with its flagship 100 series of chips becoming the processing unit of choice for data centres focused on AI applications.
Nvidia therefore owes a debt to OpenAI, given the ChatGPT developer chose Nvidia hardware to train its game-changing large-language model.
As of today, Nvidia has a market cap of $1.73 trillion against Amazon’s $1.77 trillion.
A 2.3% swing on Nvidia stock would close this gap, provided Amazon stays where it is. It is hardly a far-fetched scenario.
Amazon already booked a two-year high earlier this month on the back of robust fourth-quarter earnings.
Without any catalysts in the near term for Amazon, Nvidia could very well take the position as America’s fourth-largest company when earnings come on 21 February.
It all depends on Nvidia’s bottom line, and another cheeky revenue beat won’t hurt.