Nvidia shares hit $1 trillion mcap on AI push; stock up 180 in 2023 ...
Nvidia Corp shares have remained in buzz lately on Wall Street as the stock has gone to the moon by briefly topping the $1 trillion market capitalization on Tuesday, thanks to AI push and strong outlook by the company management.
The stock of Nvidia has surged a whopping 180 per cent in 2023 so far, settling at $401.11 on Tuesday with a total mcap at $99.20 billion. However, it tested highs of $419.38 during the session, when its total valuations raced past the much-awaited $1 trillion mark, adding it to the global mega-cap club.
There has been a significant buzz in the market surrounding ChatGPT, and this is reflected in the media numbers. Nvidia has experienced remarkable growth and the impressive performance has outpaced other members of the broad-market S&P 500 index, leading to Nvidia's valuation surpassing its peers, said Abhishek Jain, Head of Research, Arihant Capital Markets.
"The surge in Nvidia's stock value can be attributed to the rising interest in artificial intelligence. Recent advancements in generative AI, which enables human-like conversations, have fueled this interest. As a result, Nvidia's stock value has tripled in less than eight months," he said.
The rising buzz of AI and ChatGPT lifted Nvidia's stock price, which projected strong revenue growth and said it was boosting production of its AI chips to meet surging demand. Nvidia has a kind of monopoly because the GPU is a deep technology that is difficult to break down.
With the way AI has taken over the world and the fact that big data, analytics, and machine learning will play a major role, spanning all sectors, it is undeniably full of potential, said Aamar Deo Singh, Head Advisory, Angel One. "The introduction of ChatGPT was a game-changer for Nvidia because it sparked fierce competition among the top tech firms and start-ups in the world to acquire the H100," he said.
On the contrary, domestic investors are looking for proxy play's of AI in India. However, there is no pure-play AI company in India to capitalize on the theme, but one can look at select stocks from the IT sector analysts suggest.
Overall, the Indian semiconductor sector is expected to grow at a CAGR of 19.7 per cent over the next few years, and with the global as well as domestic demand expected to remain firm, this sector holds a lot of promise, said Singh from Angel One.
"India’s semiconductor component market revenue will increase to $300 billion between 2021-2026. Indian companies active in this segment include the likes of Tata Elxsi, Dixon Technologies, HCL Technologies apart from other companies. However, before investing in any of these companies, one needs to understand their business model in greater depth," he said.
Analysts said that India currently lacks any prominent AI play, to cater to growing interest in the sector. However, the AI industry is rapidly transforming various sectors, including healthcare, finance, transportation, and education. However, investing in such stock can be a risky bet.
"AI and chipmaking are a highly sophisticated industry and we are at a very nascent stage of this. Thus, we do not have pure proxy play for a growth story on a similar theme," said Kranthi Bathini, Equity strategist at WealthMills Securities.
If someone wants to stick to homegrown names, then the largecap IT counters shall be their call as they have better cash flows, higher reserves and leverage advantage to acquire the emerging names. However, investors can consider buying global names in a staggered manner.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)
