NVIDIA's market value surpasses 4 trillion, creating history! The next "explosive point" looks at the earnings season

This Wednesday, NVIDIA made history by becoming the first company ever to exceed a market capitalization of $4 trillion during intraday trading.

On July 9th, Wednesday, during the early trading session of U.S. stocks, NVIDIA's stock price briefly rose to $164.42, setting a new intraday record high, with an intraday increase of 2.8%, leading its market capitalization to surpass the $4 trillion milestone. NVIDIA currently accounts for 7.5% of the S&P 500 index, approaching the highest level on record.

Since the beginning of this year, the stock price has increased by over 20%, and if calculated from the start of 2023, the increase exceeds 1000%. NVIDIA's market capitalization first reached $1 trillion in June 2023, and then doubled in about a year, outpacing Apple and Microsoft, which have alternated in holding the top market capitalization this year, becoming the third U.S. company to exceed a market capitalization of $3 trillion.

More than two years ago, the launch of ChatGPT sparked a wave of interest in artificial intelligence (AI), and NVIDIA, as the king of the AI chip market, has been riding high. However, this year's stock price did not soar as it did in the previous two years; instead, after hitting a new high at the beginning of the year, it fluctuated and fell to a low not seen in over ten months by early April. Since then, it has rebounded from the bottom, reaching new highs several times last month and reclaiming the title of the company with the highest market capitalization.

Recent market trends indicate that NVIDIA has achieved a remarkable turnaround despite concerns about whether the explosive AI spending can continue, triggered by the emergence of the Chinese AI star DeepSeek, as well as the trade war and export restrictions initiated by U.S. President Trump, which have dampened risk appetite.

LSEG data shows that NVIDIA's market capitalization has surpassed the combined market capitalization of the stock markets of Canada and Mexico, as well as the total market capitalization of all companies listed in the UK.

Strong AI Spending from Tech Giants Benefits Earnings Season Expected to Show Strong Profit Growth

Commentators note that the recent surge in NVIDIA's stock price is catalyzed by commitments from major clients like Microsoft, Meta, Amazon, and Alphabet regarding AI spending, indicating that demand for NVIDIA's computing systems remains robust.

These four tech giants contribute over 40% of NVIDIA's revenue. Average forecasts compiled by Bloomberg analysts indicate that these four giants are expected to have approximately $350 billion in capital expenditures over the next few fiscal years, up from $310 billion in the current fiscal year. Market research firm IDC predicts that global spending on AI infrastructure will exceed $200 billion by 2028.

B Riley Wealth Chief Market Strategist Art Hogan commented that NVIDIA initially started as a gaming chip manufacturer, later became a manufacturer of cryptocurrency mining chips, and is now a manufacturer of AI computing capability chips It is continuing to move forward, becoming an obvious early winner in the AI field.

Brian Mulberry, portfolio manager at Zacks Investment Management, stated that there is clearly huge demand for NVIDIA chips in the market. NVIDIA's products are essential for AI to move to the next stage, and the rapid rebound in NVIDIA's stock price since April has refocused the market on AI. "The performance over the past 90 days has been quite impressive. There is no doubt about that."

Ken Mahoney, president of Mahoney Asset Management, believes that the next potential catalyst for further increases in NVIDIA's stock price is the upcoming earnings season for U.S. stocks.

Mahoney noted that everyone will be watching to see if NVIDIA will exceed expectations and raise its earnings guidance as it has in the past. NVIDIA's current expected price-to-earnings ratio is about 33 times. Mahoney pointed out that NVIDIA's valuation is currently below its average level over the past decade, indicating there is still room for growth. "Considering their revenue growth, you actually wouldn't think it's that expensive. In fact, the stock price should strive to keep up with earnings growth."

Wall Street Journal previously mentioned that the U.S. second-quarter earnings season will officially kick off on July 15. Goldman Sachs expects that the earnings growth of the S&P 500 in the second quarter will slow significantly from 12% in the first quarter to only 4%, marking a two-year low, primarily due to margin contraction. The decline in earnings in cyclical industries is expected to be significant, but the strong performance of tech giants will offset some of the negative impact.

Goldman Sachs expects that the information technology (IT) sector, which includes NVIDIA, Apple, and Microsoft, is expected to see earnings growth of 18%, while the communication services sector, which includes Alphabet and Meta, is expected to grow by 28%, providing support for the overall earnings growth of the S&P 500.

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