Why the NVIDIA Corp Share Price Soared Today…

What happened to make NVIDIA Corp share price rise?

Shares of listed graphics chip company NVIDIA Corp [NASDAQ:NVDA] soared more than 17% today, as the company grew its revenue by more than analysts expected, revealing that  it was making progress on expansion into new markets.

Why did this happen to the NVIDIA Corp share price?

The company said that revenue in the current quarter will be around US$1.95 billion. That’s slightly more than the average analyst estimate of US$1.9 billion.

Furthermore, the company said it was making progress on plans to expand into other markets — for instance, the car industry and data centres. With the increased interest in self-driving cars and artificial intelligence (AI), NVIDIA is looking for a way to break into those markets.

Also, as CNBC reports:

Nvidia, a company that sells graphics cards for computers and other devices, Wednesday announced the launch of a cloud service for developers to train artificial intelligence models.

But the company, whose stock has been on a tear this week, already sells technology to the biggest cloud companies — Amazon, Alphabet, and Microsoft — to do just that.

What it means is that Nvidia plans to directly compete with Amazon Web Services, Microsoft’s Azure, and Alphabet’s Google Cloud Platform — to whom it now sells its graphics processing units for their cloud services. Those cloud services, in turn, provide GPU-backed virtual machine instances that developers use to run their AI workloads.

Put simply, NVIDIA is looking to break into a market and compete with the ‘big boys’ on the block. If it succeeds, the current US$72 billion market cap could be chickenfeed compared to where it could be five years from now.

What now for the NVIDIA Corp share price?

The NASDAQ index is near a record high, and the NVIDIA share price is up 236% over the past year. Given that, it certainly looks rich at the current price. That said, if NVIDIA can pull off these move into a new market, and compete successfully with Amazon, Microsoft, and Alphabet, there’s no telling where the stock price could go from here.


Kris Sayce

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Fat Tail Investment Research, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.

Money Morning Australia