Nvidia's Stock Soars Past $3 Trillion Valuation Amid AI Chip Demand and Global Deals

Nvidia share price soars by over 5 per cent as valuation crosses $3 trillion mark amidst Saudi deal, rising AI chip demand

Nvidia's stock rose over 5 per cent, pushing its value past $3 trillion. New global deals and upcoming faster AI chips are boosting investor confidence, despite trade worries and fears of lower tech spending.Nvidia share price went up by more than five per cent on Tuesday. This led to Nvidia's total value soar past the $3 trillion mark. It is the first time since February that Nvidia has crossed this $3 trillion mark. Nvidia stock skyrocketed 5.7 per cent and was the biggest single force lifting the S&P 500. Nvidia CEO Jensen Huang announced a new partnership with Saudi AI company Humain, a deal which will see the latter use Nvidia's chips for its data centers. According to a Bloomberg report, the Trump administration may allow UAE to buy over 1 million Nvidia chips. These sales were earlier restricted by Biden's rules on chip exports. This shows that more countries, not just China, are important for Nvidia's business. Nvidia is a technology company that makes highly advanced computer chips. These chips are mainly used for doing tasks related to Artificial Intelligence (AI). Since the beginning of 2023, Nvidia became very valuable, as its market value grew by $2.5 trillion. But now, Nvidia's stock has tanked down by 22 per cent from its peak value, mostly because of worries about global trade tariffs launched by US president Donald Trump. The fear of an ensuing economic recession might lead to Nvidia's customers spending less money on buying its chips. Even though computer chips are not taxed under old U.S. tariffs, investors are still worried. However, big AI companies are still spending a lot on Nvidia's chips. Nvidia's latest chip, the H100 GPU, was the most popular for AI in 2023. Nvidia had 98 per cent of the AI chip market in 2023. Newer chips are coming, Blackwell and Blackwell Ultra series. The latest chip is Blackwell Ultra GB300 coming in the second half of 2025. These new chips are up to 50 times faster than the H100. Perfect for next-gen AI called "reasoning models". These models are smarter and cleaner, but take longer to think. Users may leave if the model is too slow, so faster chips are needed. CEO Jensen Huang claims that the new AI models would need 100 X more power than the current models. More power- hungry models can shoot up chip sales for Nvidia, despite the current global trade tensions. Some of Nvidia's high- value clientele include names like Meta (Facebook), Amazon, Microsoft, Google. Together, these tech powerhouses plan to splurge nearly $320 billion in 2025 on just AI infrastructure and chips. Meta even increased its spending plan to $64-72 billion, from a previous range of $60-65 billion. Nvidia will announce its financial results for the first quarter of fiscal year 2026 which is February-April 2025. Investors are very interested in these results. Nvidia's expected revenue is around $43 billion, 65 per cent more than last year. Expected Earnings Per Share is about $0.89, 46 per cent more than last year.90 per cent of the money will come from data center chips used for AI work. Investors will look at Nvidia's future forecast next quarter. They want to know, will customers still spend big on AI? Wall Street expects $46.4 billion revenue for the next quarter. If Nvidia predicts less than this, the stock might fall. If Nvidia gives a strong forecast, the stock will likely rise. Stock is currently cheaper than usual, It trades at a P/E ratio of 40. Its 10-year average P/E ratio is 59.7. If Nvidia reaches its expected earnings of $4.41 per share in 2026, the stock could go up by 126 per cent to match the average. At Nvidia's event in March, CEO Huang said, AI data centers will need to spend $1 trillion each year by 2028. Nvidia may also give updates about a future chip called Rubin, Rubin will be 3.3 times faster than Blackwell Ultra. Expected to come out in 2026. Nvidia's May 28 report could calm investor fears, prove that customers are still spending on AI chips, and announce powerful new chips for the future. If all this happens, Nvidia's stock may go up sharply. This may be a great time to invest before the stock rises again. Why did Nvidia's stock go up recently? Nvidia's stock rose due to strong global demand, new international deals, and high expectations for its next-generation AI chips. Will Nvidia's new Blackwell chips be faster than current ones? Yes, the Blackwell Ultra chips are expected to be up to 50 times faster than Nvidia's current H100 chip.

Prediction: Nvidia Stock Is Going to Soar After May 28 | The Motley Fool

Nvidia (NVDA 5.41%) added an eye-popping $2.5 trillion to its market capitalization since the start of 2023, thanks to surging sales of its data center chips, which are the best in the world for processing artificial intelligence (AI) workloads. However, Nvidia stock is down 22% from its all-time high as investors try to navigate growing tensions between the U.S. and its trading partners. Although semiconductors are exempt from President Donald Trump's tariffs, investors fear trade tensions could cause an economic slowdown, which will force Nvidia's customers to spend less money on chips and components. Based on the recent guidance investors received from some of the most powerful AI companies, there is no sign of a spending slowdown just yet. But investors will receive an important update on May 28, when Nvidia releases its financial results for its fiscal 2026 first quarter (ended April 27). Here's why I think its stock will soar following the report. Nvidia's H100 graphics processing unit (GPU) was the hottest data center chip on the market for AI developers in 2023, giving the company a staggering 98% market share that year. It continued to dominate sales in 2024, but developers are now lining up for Nvidia's newer chips, which are based on its Blackwell and Blackwell Ultra architectures. The new Blackwell Ultra GB300 -- which will start shipping in the second half of this year -- can deliver up to 50 times more performance than the H100 in certain configurations, making it ideal for next-generation "reasoning" AI models. These new models spend more time "thinking" in the background than traditional large language models (LLMs), cleaning up potential errors to deliver the most accurate responses to the end user. However, Nvidia CEO Jensen Huang says reasoning models need 100 times more computing power to offset the additional tokens (words, punctuation, and symbols) they consume, and to speed up the thinking process -- otherwise, users might abandon them because they are too slow to render responses. This growing need for additional computing capacity will help support Nvidia's sales for years to come, and global trade tensions are unlikely to stand in the way. Meta Platforms, Amazon, Microsoft, and Alphabet are four of Nvidia's top customers. They entered 2025 expecting to spend approximately $320 billion combined on AI data center infrastructure and chips, but Wall Street was recently concerned that tariffs would impact their core businesses, and force them to lower their forecast capital expenditures (capex). However, those four companies recently reported their latest quarterly financial results, and none of them slashed their capex plans. In fact, Meta Platforms revised its forecast capex range upward to between $64 billion and $72 billion, from a previous range of $60 billion to $65 billion. Nvidia's guidance suggests its fiscal 2026 first-quarter revenue will come in at around $43 billion, representing 65% growth compared to the year-ago period. If previous quarters are anything to go by, the data center segment will represent around 90% of the company's total revenue. This is where sales of AI GPUs and components are accounted for. According to Wall Street's consensus estimate (provided by Yahoo! Finance), Nvidia could also deliver earnings per share (EPS) of $0.89 during the first quarter, which would be a 46% increase from the year-ago period. This is an important number for investors to watch, because it influences the company's stock price and valuation. Wall Street analysts will also be laser-focused on Nvidia's guidance for the current fiscal 2026 second quarter, because it will tell them whether the company expects at least some customers to start pulling back on their AI spending due to the economic uncertainty triggered by global trade tensions. Analysts will be looking for total revenue guidance of around $46.4 billion, based on the consensus compiled by Yahoo!. A forecast below that figure could result in a sell-off in Nvidia stock. Although investor fears about economic headwinds pushed Nvidia stock down 22% from its all-time high, I think its Q1 financial report on May 28 could set the stage for a sustained upside move, especially if Huang officially puts those concerns to bed. Valuation is a key reason why. Based on the company's fiscal 2025 EPS of $2.99, its stock trades at a price-to-earnings (P/E) ratio of nearly 40 as of this writing, which is a steep discount to its 10-year average of 59.7. Plus, Wall Street expects Nvidia to deliver $4.41 in EPS during fiscal 2026, placing the stock at a forward P/E ratio of 26.4. In other words, the stock would have to soar by 126% over the next year just to trade in line with its 10-year average P/E ratio of 59.7. But the long-term picture looks even more exciting. At Nvidia's GTC conference in March, Huang told the audience he expects annual data center spending to reach $1 trillion by 2028, primarily because of the computing power required by reasoning models. On that note, Nvidia might even provide an update on its upcoming Rubin GPU architecture on May 28, which could deliver a further increase in performance of 3.3 times compared to Blackwell Ultra. It's expected to officially launch sometime next year, and it'll pave the way for developers to create even more advanced reasoning models. Simply put, I think the May 28 report will not only put short-term sales concerns to bed, but it will also remind investors that Nvidia is looking to dominate the AI industry for years to come.