Nvidia stock soars amid strong AI chip demand and forecasts

Shares of Nvidia climbed on Thursday after the chipmaker predicted an optimistic second-quarter earnings and declared a stock split that floored investors. Once again, it showcased its power in the AI-related chips market.

Premarket Trading Surge

Nvidia‘s stock surged 6.5% in premarket trading, reflecting strong investor confidence following its robust fiscal second-quarter revenue forecast. 

This optimism also boosted rival AI-related chipmakers, including Advanced Micro Devices, Broadcom, and Micron Technology, which saw gains between 2% and 3%.

Revenue Forecast Exceeds Expectations

The leading AI chip manufacturer projected fiscal second-quarter revenue of $28 billion, plus or minus 2%, surpassing the analysts’ average expectation of $26.66 billion, according to LSEG data. 

Nvidia’s strong forecast highlights its dominant position in the AI chip market and the growing demand for its products.

Stock Performance and Market Capitalization

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Nvidia, currently Wall Street’s third most valuable firm, has seen its stock soar almost 92% this year. At current price levels of $1,016, the company’s market capitalization is set to increase by approximately $165 billion. 

If Nvidia’s stock closes above $1,000 on Thursday, it will be the first time it has reached this psychologically significant milestone. 

“The stock price will certainly reach $1,000 per share, but whether it can maintain that level is uncertain,” noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Stock Split and Dividend Increase

In addition to its revenue forecast, Nvidia announced a ten-for-one stock split, effective June 7, and a 150% increase in its quarterly dividend on a post-split basis. These moves are likely to further attract investors by making the stock more accessible and enhancing shareholder returns.

AI Industry Barometer

Based in Santa Clara, California, Nvidia’s chips are considered the gold standard in artificial intelligence. The company’s strong performance and optimistic forecast are seen as indicators of the burgeoning AI industry’s health and growth potential. 

This sector has been a major driver of the current bull run in U.S. stocks, stoking significant investor enthusiasm.

Conclusion

Nvidia’s impressive revenue forecast and strategic stock split signal strong growth prospects in the AI chip market, boosting investor confidence and driving stock prices higher. 

The company’s continued innovation and leadership in AI technology position it as a crucial player in the industry’s evolution, making it a key barometer for market trends.