With a market cap of about $5.38 trillion, Nvidia (NVDA) is now the largest stock in the Russell indexes following a reconstitution. Alphabet (GOOG) (GOOGL) is now in second place. Apple (AAPL) is now in third. Microsoft (MSFT) is now fourth, with Amazon (AMZN) right behind it.
www.barchart.com That reconstitution, now a semi-annual event, is important for Wall Street. That’s because during the rebalance, when companies move between indexes or are added/removed, funds that track the indexes are forced to buy more shares of companies as their market values rise. In Nvidia’s case, becoming the largest stock in the Russell indexes could easily create even more institutional interest.
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Nvidia’s Market Value Surged Thanks to Its AI Dominance
Nvidia’s value has—and will continue to—rocket higher because its chips are now at the center of the artificial intelligence industry. In fact, the company’s graphics processing units, or GPUs, now power many of the world’s most advanced AI systems. Large technology companies, including Microsoft, Amazon, Meta, and Google, all rely heavily on Nvidia to help train and run artificial intelligence models.
And, as AI adoption accelerates, demand for Nvidia’s products is exploding. We can see that with earnings. In its most recent quarter, EPS of $1.87 beat by 10 cents. Revenue of $81.62 billion, up 85.2% year-over-year (YoY), beat by $2.65 billion. Data center revenue rocketed 92% YoY to $75.2 billion.
“The buildout of AI factories—the largest infrastructure expansion in human history—is accelerating at extraordinary speed,” said Jensen Huang, founder and CEO of Nvidia, as quoted in a press release. “Agentic AI has arrived, doing productive work, generating real value, and scaling rapidly across companies and industries. NVIDIA is uniquely positioned at the center of this transformation as the only platform that runs in every cloud, powers every frontier and open source model, and scales everywhere AI is produced—from hyperscale data centers to the edge.”
The bullish case for Nvidia is simple to understand. Artificial intelligence spending still appears to be in the early stages. Big technology companies continue investing billions into AI infrastructure, while businesses around the world are just beginning to adopt generative AI tools. And if AI continues growing, Nvidia should remain one of the biggest winners, which we can see in the company’s guidance. Looking ahead to the fiscal second quarter, Nvidia expects revenue to be about $91 billion, as compared to expectations of $87.3 billion. Adjusted AP gross margins are expected to be 75%.
CEO Jensen Huang Wants to Reinvent the PC Too
During an address at the Taiwan Computex conference, Huang said his company is going to reinvent the PC. That’s a sign Nvidia aims to move beyond AI and data centers, with a focus on smaller devices, such as phones and computers, in an effort to own “every bit of the AI stack in some shape,” as noted by IDC analyst Tom Mainelli, as quoted by CNBC.
Reportedly, Nvidia is jumping into the PC market with the RTX Spark chip, which will bring artificial intelligence capabilities to laptops and desktops, too. "RTX Spark brings everything NVIDIA has built—CUDA, RTX, our AI platform—into a single superchip. Local agents. Frontier models. Creative workflows. RTX games. All on a laptop," Huang added, as quoted by Fox Business. “This is the new PC. The personal AI computer.”
What Do Analysts Say About NVDA Stock?
Of the 49 analysts covering NVDA stock, 43 have a “Strong Buy” rating, three have a “Moderate Buy” rating, two have a “Hold” rating, and one has a “Strong Sell” rating, making for a consensus rating of “Strong Buy.” The mean price target of $299.35 implies a potential upside of 34% from current levels. Meanwhile, the high price target of $500 implies as much as 124% possible growth from here.
Nvidia does face competitive threats from other giants, such as Advanced Micro Devices (AMD), Alphabet, and Amazon. But Nvidia remains a clear leader that won’t be knocked down from its pedestal any time soon. The company has become the backbone of the AI industry, and its leadership position is difficult to challenge in the near term. For long-term investors, Nvidia still looks like one of the top technology companies of the decade. The company has powerful growth drivers, strong profitability, and a dominant role in AI infrastructure. Artificial intelligence is now the biggest theme driving investor optimism, capex, and stock market leadership—and Nvidia sits at the center of it all.
www.barchart.com On the date of publication, Ian Cooper did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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