NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) is set to close out trading on Tuesday at a new all-time high following its blockbuster earnings report and 10-for-1 stock split announcement last week.
The AI darling’s share price breached the $1,100 mark just before the markets closed on Tuesday, exchanging hands at around $1,141.
Part of Nvidia’s surge is being propelled by an unlikely ally.
Elon Musk's AI start-up, xAI, raised $6 billion earlier this week, signaling robust ongoing investment in AI.
Since xAI is not developing its own AI chips, it will likely rely on Nvidia's processors, directly boosting Nvidia's sales, which already show strong financial performance and future growth projections.
All told, this indicates sustained demand for AI, allaying investor fears of a decline.
A GPU 'gold rush'
NVIDIA's market cap has soared to over $2.5 trillion, surpassing the entire German stock market and making it the third most valuable company globally, behind Microsoft and Apple.
Similar stock splits by Walmart, Alphabet, Tesla, and Amazon have historically led to short-term gains as more investors buy in, Frank Holmes, chief investment officer at U.S. Global Investors (NASDAQ:GROW) noted.
Nvidia is “just getting started,” Holmes said.
“They already control a huge portion of the market, and they’ve built an entire ecosystem around their AI tools, locking in customers and driving sales. It's like the gold rush, but instead of pickaxes, they’re slinging GPUs, purchased by everyone from Amazon to Dell to Tesla.”
NVIDIA's GPUs are set to become as widespread as self-driving features. Tesla announced that it has installed 35,000 of NVIDIA's H100 GPUs in its supercomputers.
“Some people might compare NVIDIA to Tesla, and sure, there are similarities,” Holmes noted. “Both companies are pushing the boundaries of technology and disrupting their industries.”
More gains ahead?
What’s more, Nvidia’s rally doesn’t appear to be slowing down. Year to date, the stock is up almost 135%, to say nothing of the five-year chart.
“The stock continues to crush it on all metrics and the future exponential growth rate makes it worthy of every superlative uttered about them,” Freedom Capital Markets (NASDAQ:FRHC) chief global strategist Jay Woods commented.
“Add in a 10-for-1 stock split and the price of the stock gapped up and continued higher. It appears to have started yet another leg of its epic bull run and doesn’t appear to be looking back any time soon.”