Nvidia is on the verge of becoming the first company ever to reach a market value of $6 trillion (8,061 trillion won). Rising long-term U.S. Treasury yields are weighing on the stock market, but Nvidia has been setting fresh record highs day after day on solid earnings prospects and a massive share buyback program.
Nvidia shares closed at $238.90 on the 5th, up 2.12% from the previous session, according to Yahoo Finance and other sources. The stock climbed as high as $240.10 during the session, an all-time high. Its market value swelled to $5.78 trillion at one point, bringing it closer to the $6 trillion mark.
Nvidia's share price would need to rise about 3.8% from current levels for the company to reach a $6 trillion market value. Some market watchers say crossing that threshold is only a matter of time, given the recent upward momentum. An analysis of options market pricing by CNBC showed roughly a 50% probability that Nvidia will reach that level by the end of this month. The chance of clearing it within this week was put at 13%, and the odds of doing so by Dec. 18 at about 67%. The probability of reaching a $7 trillion market value by Nov. 20 was about 6%.
The main driver behind Nvidia's gains is sustained investment in artificial intelligence infrastructure. Despite debate over whether AI investment has become a bubble, demand for AI spending across major industries has shown little sign of slowing. After Nvidia posted better-than-expected earnings, major supply chain companies have also been signaling solid AI demand.
Taiwan's Foxconn, a key partner in producing Nvidia's AI servers, posted third-quarter revenue of 3.03 trillion Taiwan dollars, up 47% from a year earlier and above market expectations. Analysts read the figure as evidence that orders for AI servers equipped with Nvidia's graphics processing units are holding firm in the actual supply chain.
Aggressive shareholder returns are also lifting investor sentiment. The stock has been on an upward run since Nvidia announced a record $150 billion increase in its share buyback authorization on Sept. 28, followed a day later by U.S. President Donald Trump's meeting with Nvidia Chief Executive Jensen Huang and other AI company leaders.
Wall Street's view is also favorable. Morgan Stanley recently named Nvidia its top pick in the semiconductor sector again, assigning an overweight rating and a price target of $300. Joseph Moore, an analyst at Morgan Stanley, said Nvidia is very well positioned and that its valuation remains reasonable.
Easing concerns about further rate increases by the Federal Reserve, following a slowdown in U.S. employment, have also supported sentiment toward technology stocks. U.S. nonfarm payrolls rose by 29,000 in September from the previous month, far below market expectations of 90,000. As a result, the probability of a Fed rate increase in October, as priced in by the CME FedWatch tool, plunged to the 20% range from the 60% range a week earlier.
While wariness about further tightening has eased, long-term market rates have continued to climb. With inflation pressure persisting and the burden of the U.S. fiscal deficit compounding it, the yield on the 10-year U.S. Treasury note rose to 5.347%, the highest level since April 3, 2002.
