Nvidia hits record high, nears $6 trillion valuation

Nvidia ↗ 0.14% shares climbed to another all-time high on Monday, Oct. 5. At its peak during the session the chipmaker was worth about $5.78 trillion, according to Yahoo Finance, which puts it within reach of becoming the first company ever valued at $6 trillion. The shares rose 2.12% to close at a record, ending the day with a market value of about $5.76 trillion. The rally comes after a record stock buyback, upgrades from Wall Street analysts and more evidence that companies are still spending heavily on artificial intelligence.finance.biggo+1

The stock opened at $236.07 and reached $239.86 in the afternoon. Nvidia is up about 28% this year and has recovered from a July sell-off that erased about $1 trillion of its market value. Trading in options suggests about a 50% chance that Nvidia will reach $6 trillion by the end of October, CNBC reported. To cross the line, the stock would need to touch about $248.finance.yahoo+2

Buyback and analyst calls

On Sept. 28, Nvidia's board approved an additional $150 billion for share repurchases. That brings the total amount left in the program to $235 billion, which the company expects to use through fiscal 2028. Nvidia called it "the largest share repurchase authorization increase in history". Reuters reported that the increase is bigger than Apple's ↗ 0.22% $110 billion approval in 2024.nvidianews.nvidia+1

Morgan Stanley ↗ 0.44% put Nvidia back at the top of its chip-stock picks after meeting with chief executive Jensen Huang. The bank said it expects the main constraint on AI infrastructure to move from chip supply to data-center land, power and financing. On Oct. 5, BNP Paribas raised its price target on Nvidia to $345 from $285. The bank pointed to Nvidia's range of AI hardware, its CUDA software and its networking business.seekingalpha+1

Supply-chain data has also been strong. Foxconn, formally Hon Hai Precision Industry, reported September revenue of $36.5 billion, its best month on record. The company credited strong demand for AI products. Nvidia has forecast revenue of about $108 billion for its current quarter.247wallst+1

Broader market and doubts

The Nasdaq Composite rose 1.05% to a record close of 27,477.31. The S&P 500 gained 0.66%. Not all chip stocks joined in, however. The iShares Semiconductor ETF ↘ 0.01% was roughly flat on the day, and its gain of about 96% this year is still far ahead of Nvidia's.247wallst+1

Opinions differ on how far the rally can go. Dan Ives of Yorkville Ives & Co. told CNBC that Nvidia is "the one chip in the world fueling the AI revolution." Michael Burry, by contrast, holds bets that the stock will fall, in the form of put options running through September 2027. David Bahnsen of the Bahnsen Group warned on Bloomberg Businessweek that every capital-intensive boom has gone through a period when "a whole lot of capital got set on fire before it worked out. We have not yet got to that stage."finance.yahoo+1