$200 billion in a day! Nvidia shares rally; all eyes on $1 trillion m-cap mark. Here's why

Nvidia Corp added a whopping $200 billion to its market capitalisation(m-cap) in overnight trading, surging 24.37 per cent in a single day, as the chipmaker projected a strong revenue growth and said it was boosting production of its AI chips to meet surging demand.

Thursday saw Nvidia's stock zooming 28 per cent to $391.50 apiece, its highest level ever, pushing its market value to over $960 billion and making it the fifth-most valuable company on Wall Street. At Thursday's close of $379.80, Nvidia eventually commanded a m-cap of $939.29 billion against $755.24 billion in the previous session..

Nvidia reported April quarter earnings and hosted a conference call on May 24 where it guided for particularly strong quarter-on-quarter revenue growth in the July quarter, driven by surging AI demand.

"This supports our server team’s view that the most severe inventory correction in servers was in February-April for components. While we have had a very positive view on the secular growth potential of data center, we had thought a softness in US cloud spending might create a headwind to data chip demand through the first half of this year, with a recovery beginning in the second half," Nomura said in a note.

Also Watch: Star Health share price tanks 7% today; should you buy the Jhunjhunwala stock? What analysts say

Nomura said Nvidia’s July quarter outlook suggests that the recovery in chip demand from US cloud server providers began earlier than expected. Nvidia’s PC-related (gaming) sales rose quarter-on-quarter in the April quarter and the brokerage feels Nvidia’s very strong overall sales guidance implies continuing quarter-on-quarter growth in the July quarter.

"Nvidia’s AI boom is making it climb up the big tech ladder and is positioning itself to become a must-own stock for everyone. The days of talking of FAANG (Facebook, Apple, Amazon, Netflix, and Alphabet) have morphed into MATANA (Microsoft, Apple, Tesla, Alphabet, Nvidia, and Amazon). AI investment will likely be entering a boom stage.

Edward Moya, Senior Market Analyst at The Americas OANDA said NVIDIA’s AI boom is making it climb up the big tech ladder and is positioning itself to become a must-own stock for everyone.

"The days of talking of FAANG (Facebook, Apple, Amazon, Netflix, and Alphabet) have morphed into MATANA (Microsoft, Apple, Tesla, Alphabet, Nvidia, and Amazon). AI investment will likely be entering a boom stage," h said.

In a commentary, Moya said Nvidia is poised to become a trillion-dollar company as the chipmaker is planning on a substantial increase in the second half of the year. 

"Robust orders for data centers is a great way to kick off what could be an amazing 10-year cycle.  Second quarter sales are eyed at $11 billion +/- 2 per cent, which is well above the consensus estimate of $7.18 billion.  Everyone is pushing AI in the cloud and you will need Nvidia to do that," he said.

Also Watch: 9 years of PM Modi: These 5 multibagger stocks have rallied up to 12,000% during Modi government stint

Also read: BHEL Q4 results preview: Here's what brokerage firms expects from the PSU firm

Also read: Sensex at 1,00,000 level? Only a matter of time, says Jefferies