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New Intelligence Report

Editor: Editorial Department

【New Wisdom Introduction】Nvidia's stock price soared again, with its market value surging by $329 billion in a single day, setting a new record.

Nvidia's stock price has been on another roller coaster ride this week.

As of Wednesday's close, Nvidia's stock price surged 13%, and its market value surged by $329 billion, once again breaking its own single-day record set in the past few months.

Just a day ago, Nvidia's stock price plummeted by 7%, and its market value evaporated by more than $193 billion.

"Nvidia's volatility shows how confused investors are right now about the investment outlook for AI and chip stocks," said Matt Maley, chief market strategist at Miller Tabak + Co.

"Unlike last year's continued bullishness, investors are beginning to worry that the huge investments in artificial intelligence will not bring the expected returns."

Especially in the past two weeks, many investors have withdrawn a large number of technology stocks due to pessimism about the expected returns of the AI ​​industry, choosing to arbitrage and run away, and turning funds to banks and cyclical companies.

Giants such as Nvidia, Apple, Microsoft and Google are all victims of this panic mentality.

However, starting this week, technology giants and unicorns have released their second-quarter earnings reports, which have eased people's concerns to a certain extent and prompted people to flock to the technology industry again.

Nvidia's stock price rose 150% in the first six months of this year, and then better-than-expected inflation led everyone to bet that the Federal Reserve could cut interest rates as early as September.

The news was finally officially announced. On Wednesday, Federal Reserve Chairman Jerome Powell said a September rate cut was a foregone conclusion.

After Powell released the signal of a September rate cut, the three major U.S. stock indexes all rose. As of the close of the day, the Nasdaq rose 2.64%, the S&P 500 rose 1.58%, and the Dow Jones rose 0.24%.

Benefiting from the favorable impact of macroeconomic policies, investors' enthusiasm for the technology industry and Nvidia has further increased.

Top 10 stocks with the highest market value increase in a single day

After Wednesday's surge, Nvidia became the first stock to gain more than $300 billion in a single day.

In the top ten list, Nvidia not only occupies half of the seats, but also takes the top three.

On February 22 and May 23 this year, Nvidia's daily market value increased by US$276.6 billion and US$217.7 billion, respectively.

Nvidia's strong stock price growth is closely related to its global revenue growth.

According to Statista, in fiscal 2024, Nvidia's total revenue exceeded US$60 billion, with revenue in the United States reaching US$26.97 billion, a significant increase from US$8.29 billion in the previous fiscal year.

In fiscal year 2024, revenue in Taiwan reached US$1.341 billion and revenue in mainland China reached US$10.31 billion.

In addition to Nvidia, Google's parent company Alphabet, which is on the list, has released its second-quarter financial report, and another large technology company on the list, Meta, is scheduled to release its financial report after the close of trading on Wednesday.

Microsoft leads the rise, dark horse chip stocks

The reason why Nvidia's stock price has seen another surge is mainly due to the fact that its major customers Microsoft and AMD both announced their new quarterly financial reports on Tuesday.

Microsoft's financial report showed that capital expenditure in the second quarter reached US$19 billion, a year-on-year increase of 77.6%, far exceeding analysts' expectations.

Cloud computing and AI-related expenditures accounted for almost all of Microsoft's capital expenditures in the second quarter. It is expected that expenditures will continue to rise on a month-on-month basis. The computing power industry chain in artificial intelligence, AI servers, chips, storage, etc. still dominate investment.

Microsoft CEO Satya Nadella and Chief Financial Officer Amy Hood said the company plans to invest more in Nvidia-based infrastructure next year.

"Microsoft's announcement of increased capital spending, driven primarily by demand related to cloud computing and artificial intelligence, is a big boon to Nvidia's sales outlook," said Kunjan Sobhani, an analyst at Bloomberg Intelligence.

According to AMD's second quarter financial report, the company achieved revenue of $5.835 billion in the second quarter, up 8.9% year-on-year, and net profit of $265 million, up 881% year-on-year and 115% month-on-month. This continued to exceed market expectations, which once again made US tech stocks boil.

In addition, Meta also released its second-quarter earnings report after the close of trading on Wednesday.

Both revenue and profit were higher than expected, capital expenditure in the quarter was lower than expected, and the upper limit of the full-year capital expenditure range remained unchanged, but the lower limit was raised by US$2 billion.

Meta highlights that capital expenditures will grow significantly in 2025, with infrastructure costs being an important driver, which will continue to support AI research and product development efforts.

In addition to the sharp rise in Nvidia, Broadcom in the U.S. stock market rose by more than 8%, ASML and Micron Technology rose by more than 7%, AMD rose by 6%, and TSMC and Qualcomm rose by more than 5%.

References:

https://www.bloomberg.com/news/articles/2024-07-31/nvidia-s-100-billion-swings-become-routine-as-volatility-soars