Nvidia hits first record high since May on AI rebound

Nvidia ↗ 1.92% shares set an intraday record on Friday, October 2, their first since mid-May. The stock rose about 3% and lifted the company's market value to roughly $5.7 trillion, according to Bloomberg. That leaves the world's most valuable public company less than $300 billion short of becoming the first to reach $6 trillion.bloomberg+1

The gain adds to a rally of nearly 25% from a late-July low. Back then, worries about the outlook for artificial intelligence had pushed the stock down, and a two-month selloff erased more than $1 trillion in market value. The shares are up about 27% so far this year, on track for a fourth straight year of double-digit returns.ndtvprofit+1

Breaking the May peak

The shares finally moved past their May intraday peak, a level they had come close to several times without breaking through. CNBC's Jim Cramer said the move "breaks the double top". Investing.com put the stock up 2.9% at $237.75 in Friday's session. The company's investor relations site showed a previous close of $228.38 on October 1.cnbc+2

Buyback and analyst support

On Monday, Nvidia said it would add a record $150 billion to its share buyback plan. That raised its total remaining authorization to $235 billion through fiscal 2028. On Friday, Morgan Stanley ↗ 0.33% named Nvidia its top semiconductor pick again after meeting with CEO Jensen Huang and CFO Colette Kress. The firm said the main limits on building AI infrastructure are moving away from chip production and toward data-center land, power and financing. It argued that this shift could favor Nvidia, because customers want to get as much computing as possible out of limited electricity. Bloomberg reported that hopes for AI agents such as Meta Platforms' ↗ 2.09% Muse have also lifted the stock in recent weeks.democrata+3

The economy helped too. A soft September jobs report showed payrolls grew by 29,000. Along with falling oil prices, that brought down bond yields and lowered the odds of a Federal Reserve rate hike in October. The Nasdaq Composite hit a record high, and the S&P 500 rose about 1%.cnbc+1

Lingering questions

In August, Nvidia reported second-quarter revenue of $96.2 billion. It forecast third-quarter sales of $105.8 billion to $110.1 billion. Investors still question whether the AI boom is a bubble. Some also worry about "circular" deals, in which Nvidia invests in customers who then buy its chips. Competition is growing as well. AMD Advanced Micro Devices, Inc. ↘ 0.45% has launched a rack-scale system, and Amazon Amazon.com, Inc. ↗ 0.70% and Google Alphabet Inc. ↗ 1.05% now offer their own custom chips to outside customers.finance.yahoo