Rick Wilking/Reuters
- Nvidia tacked on another $28 billion in value after smashing through expectations in its latest earnings report.
- The company's third-quarter revenue soared 206% year over year to $18.1 billion.
- That could be a sign Wall Street's excitement for artificial intelligence is far from over.
Nvidia added to its market value Wednesday after crushing expectations in the third-quarter earnings report, a sign that Wall Street's hype for generative AI may be nowhere close to ending.
Shares of the chipmaker rose as much as 2.3% in early trading, touching $501. That represents around $28 billion briefly added to the market cap, which totaled $1.2 trillion yesterday at the closing bell. The stock later pared gains.
Revenue soared 206% to $18.1 billion, topping Wall Street estimates for $16.1 billion. Earnings per share clocked in at $4.02, blowing past the expected $3.39.
Those are "jaw dropper" results, and it could suggest that a wave of AI monetization has begun to hit the market, Wedbush analysts said in a note on Wednesday, pointing to other positive earnings reports from firms like Microsoft and Palantir.
"To this point, we view AI as the most transformative technology trend since the start of the Internet in 1995 and believe many on the Street are underestimating the $1 trillion of AI spend set to happen over the next decade in a bonanza for the chip and software sectors looking forward into 2024 with Nvidia and Redmond leading the way," analysts said.
Other commentators, though, have warned Nvidia could be overvalued. The stock has been one of the market's best-performing trades this year, with shares rocketing 249% from levels at the start of 2023.
"While there is strong demand for Nvidia's chips, and the company produces a high quality product, Nvidia's extremely high stock valuation is outrageous and far from sustainable," New Constructs CEO David Trainer said in a statement on Wednesday. "Our message to investors is to avoid Nvidia's stock until it falls to a much more reasonable valuation closer to $100-$150 per share."