Nvidia's stock market value rises to a record $277 billion

The price of Nvidia's stock shot up to an all-time high, breaking Meta Platforms' recent record and registering the biggest increase in market capitalization in a single session. The market value of the chipmaker's shares increased by $277 billion, or 16%, bringing it closer to $2 trillion altogether. The surge came after outstanding profits, which increased trust in the company's AI capabilities and future prospects.

The shares of the chipmaker rallied after it reported blowout results that cemented Wall Street bets on the potential for its artificial intelligence technologies. The company’s guidance also beat Wall Street estimates, driven by AI spending at its biggest customers, including Microsoft Corp. and Meta. A series of estimate-beating results means the shares have been getting cheaper on a price-to-earnings basis.

Nvidia surpassed high expectations, according to Morgan Stanley analyst Joseph Moore. As per him, “We had never seen $2 billion of upside to quarterly revenue guidance until Nvidia did it a few quarters ago, but it has become routine during the AI surge. Strength of AI demand continues to be remarkable."

Nvidia reported fourth-quarter revenue of $22.10 billion, up from $6.05 billion, and beating estimates of $20.62 billion. Adjusted for certain items, fourth-quarter earnings were $5.16 a share, compared with estimates of $4.64 a share, according to LSEG data.

Nvidia forecast first-quarter revenue growth of 233%, ahead of Wall Street expectations of 208% growth. The company forecast revenue for the current quarter of $24.0 billion, plus or minus 2%. Analysts on average were expecting revenue of $22.17 billion, according to LSEG data. It expects first-quarter adjusted gross margin to be 77%, plus or minus 50 basis points. Analysts on average forecast a gross margin of 75.6%.