Friday Intraday Trading Sees Nvidia's stock Market Cap Momentarily Cross $2 Trillion

Nvidia briefly reached $2 trillion in market cap during intraday trading Friday, shortly after reporting strong earnings that sent shockwaves through Wall Street about AI technology. Yet Nvidia stock could quickly lose value.

Investors may need to wait some time before finding out their fate.

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1. Stocks were little changed

Nvidia became the latest tech stock to surpass a $2 trillion market valuation after posting strong earnings reports this week. At its current valuation, however, Nvidia could see further upside.

Nvidia has seen exponential growth due to a surge in demand for their chips within the booming artificial intelligence (AI) sector. Their GPUs, or graphics processing units, are tailor-made to handle complex computing tasks such as designing computer games, engineering simulations, mining cryptocurrency mining and training AI models.

Nvidia reached $1 trillion just over one year after going public and is one of four companies with market values above that level. Should its rally continue, Nvidia may challenge Apple and Microsoft for entry into the $3 trillion club; but maintaining such growth could prove challenging as data center demand diminishes.

2. Nvidia’s stock rose more than 4% at the open

Nvidia stock soared after reporting impressive earnings. Nvidia’s chips have become essential components of artificial intelligence computing boom; however, their rapid demand may not persist forever.

Recently, investors have seen this semiconductor maker soar as they recognize its future potential. Their graphics processors are ideal for the type of number-crunching required in both cryptocurrency mining and AI programs.

Nvidia’s recent rally has also been driven by investors’ perception that its current market capitalization does not reflect how much growth the company can deliver in coming years. Therefore, some investors are buying shares with an eye toward hitting $3 trillion as soon as possible, which would put Nvidia behind Apple, Microsoft, and Alphabet/Google parent Alphabet respectively – an ambitious target but one which may never come true anytime soon given where Nvidia currently sits in terms of market cap.

3. The stock pared its gains later in the session

Nvidia stock increased over 4% at Friday’s opening bell, pushing its market value above $2 trillion for the first time ever – surpassing Coca-Cola by some $273 billion! Nvidia joins Apple, Alphabet (Google’s parent), Amazon and Microsoft among an elite group.

Nvidia’s valuation has seen an unprecedented surge due to soaring demand for artificial intelligence (AI) chips, but this demand may soon subside as new competition enters the field, sending Nvidia share prices lower in response.

Investors may worry that AI stocks represent a bubble, which could collapse like the dotcom tech stocks did a decade ago. Nvidia’s multiples, however, indicate that their momentum still has plenty of steam left before running out.

4. Nvidia’s stock closed at $1.94 trillion

Nvidia stock soared more than 4% at the opening bell on Friday, pushing its market cap past $2 trillion during intraday trading. Later in the session, its gains moderated but it still closed above this milestone.

As a result of its extraordinary growth, Qualcomm is now part of the $2 trillion club, alongside Apple and Microsoft. Qualcomm now ranks third-most valuable publicly listed U.S. company after Amazon and Saudi Aramco (an oil giant in Saudi Arabia).

Jensen Huang, co-founder and CEO of Nvidia, revealed in his most recent podcast episode for “Acquired” that building Nvidia proved much harder than expected; but as an entrepreneur it’s the ability to push past any pain to keep growing that defines success.

Investors’ enthusiasm for high-performance chipmaker Nvidia appears to have been driven by growing interest in artificial intelligence technology and rising artificial intelligence demand, fuelling investor belief that the company will remain relevant over time. Although high tech weighed on overall markets, major American indexes still achieved solid gains overall.