Nvidia's Stock Price Could Reach Four Digits as It Closes Up 16.4%
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On February 22 (Thursday) local time, all three major U.S. stock indices rose, with AI chip leader Nvidia reporting strong earnings and optimistic guidance, boosting chip and AI-related stocks. The Dow and S&P 500 indices hit new all-time closing highs.
At the close of trading, the Dow Jones Industrial Average rose 456.87 points, or 1.18%, to 39,069.11; the Nasdaq Composite Index rose 460.75 points, or 2.96%, to 16,041.62; and the S&P 500 Index rose 105.23 points, or 2.11%, to 5,087.03.
Nvidia closed up 16.4%, reversing its four-day losing streak, with a closing price of $785.38, setting a new record high and a market capitalization of $1.94 trillion. Its single-day market cap increase of $277 billion, according to institutional data, marks the largest single-day market cap gain for any U.S. stock in history.
The company's Q4 2023 earnings report, released after hours on the 21st, showed revenue of $22.1 billion, up 265% year-over-year, with data center revenue surging 409% to $18.4 billion and gaming revenue up 56%. Net profit for the quarter was $12.3 billion, a 769% increase. Nvidia expects Q1 revenue to reach $24 billion, with gross margins potentially rising further to 77%. During the earnings call, CEO Jensen Huang stated that demand for the computing power underpinning AI remains 'extremely massive,' with 'surging demand across companies, industries, and nations worldwide.' This drove the Philadelphia Semiconductor Index to surge by 4.97% on Thursday, marking its largest single-day gain since May 2023. The broader S&P Information Technology sector rose by 4.35%, leading gains among the 11 major industry sectors and also recording its biggest single-day increase since May of last year.
"From the perspective of demand peaks and other factors, this AI party is just getting started," said Dan Ives, senior equity analyst at Wedbush. "This wave of spending will flow to other tech companies and, in our view, will continue to fuel the tech bull market. Over the next two to three years, companies like AMD may enter the competition, but for now, Nvidia is 'the only game in town.'" Ives believes Nvidia's stock price could reach four digits.
In other individual stock news, electric vehicle maker Rivian plummeted 25.6%, hitting a record closing low, as the company projected 2024 production of 57,000 vehicles, falling short of market expectations of 66,000.
Lucid Group dropped 16.76% after its Q4 earnings report and 2024 delivery guidance fell below expectations. The company expects to produce 9,000 vehicles in 2024, while the market had anticipated 23,000.
Moderna rose 13.53% as cost reductions and deferred revenue helped the company post an unexpected Q4 profit. Additionally, the company stated it is actively developing an RSV vaccine and has outlined its commercialization roadmap. Moderna reaffirmed its 2024 product sales forecast of approximately $4 billion, expecting the RSV vaccine and other pipeline vaccines to fill the gap left by declining COVID-19 vaccine sales. Ctrip Group rose 7.3%, achieving Q4 revenue of 10.3 billion yuan, a year-on-year increase of 105%. In Q4, Ctrip's outbound hotel and flight bookings recovered to over 80% of 2019 levels, while total bookings on its international OTA platform grew by more than 70% year-on-year.
Baidu gained 1.04%, receiving positive outlook from renowned short-selling firm Citron Research. "Baidu remains the most undervalued stock in the AI sector," Citron Research stated in a report.
Southeast Asian ride-hailing and food delivery platform Grab fell 8.41%, reporting its first quarterly profit and announcing its first stock buyback. However, weak annual sales forecasts raised concerns about growth prospects. The company expects fiscal 2024 revenue between $2.7 billion and $2.75 billion, below analysts' previous estimate of $2.8 billion.
On economic data, the US Labor Department reported on the 22nd that initial jobless claims for the week ending February 17 were 201,000, compared to expectations of 216,000 and the previous figure of 212,000. This marks the lowest level in a month, indicating continued strength in the US labor market despite increasing layoffs at large companies.
Analysts noted that while this downward trend isn't expected to persist, the likelihood of rapid deterioration in the US labor market remains low. "As economic growth slows this year and the labor market continues to rebalance, we may see a slight rise in jobless claims, but no significant surge is anticipated," said Nancy Vanden Houten, Chief US Economist at Oxford Economics. "We expect job growth to remain positive, with the unemployment rate rising modestly to 4.2% by year-end." The preliminary Manufacturing Purchasing Managers' Index (PMI) data released by S&P Global indicates that US business activities continued to expand in February, albeit at a slower pace. The composite PMI fell from 52% in January to 51.4% in February.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated: "While service sector growth has slowed slightly, the return to growth in manufacturing is encouraging, with factory output growing at its fastest pace in ten months."
Market expectations for interest rate cuts have significantly cooled. According to the CME FedWatch Tool, traders now expect the Federal Reserve to cut rates by only 80 basis points this year, far below the 160 basis points predicted in January. The anticipated timing of the first rate cut has also been pushed back to June, rather than the previously expected March. With recent strong economic data including GDP, non-farm payrolls, and inflation, there's even discussion in the market about the possibility of "further rate hikes."
On the 21st, the Federal Reserve released meeting minutes showing that during last month's monetary policy meeting, most Fed officials expressed concerns about cutting rates too quickly, believing the risks outweighed those of keeping rates high for too long. Analysts noted that the minutes align with the January meeting statement and the mainstream views publicly expressed by committee members in recent weeks, indicating the Fed's preference for patiently waiting for economic or inflation data to decline before taking further action. In the commodities market, international oil prices rose on February 22, driven by factors including a decline in U.S. crude oil inventories. The April West Texas Intermediate (WTI) crude oil futures on the New York Mercantile Exchange increased by 70 cents, or 0.9%, settling at $78.61 per barrel.
Earlier, data released by the U.S. Energy Information Administration (EIA) showed that U.S. crude oil inventories rose by 3.5 million barrels in the week ending February 16, a smaller increase than market expectations.
On the same day, April gold futures fell by 0.18%, settling at $2,030.70 per ounce, pressured by a stronger U.S. dollar.
Chris Gaffney, President of EverBank Global Markets, commented, "We are seeing gold prices remain range-bound. If more data indicates a robust U.S. economy and no further easing of inflationary pressures, the downside risks for gold prices outweigh the upside risks in the short term."