Nvidia shares rose 25 percent – lifting the broad market

Late on Wednesday evening, the semiconductor giant Nvidia presented a strong report for the first quarter. The company announced revenue of around $11 billion for the current quarter, while analysts were expecting an average of $7.15 billion. In Wednesday’s after-trade, the share rose almost 30 per cent at most.

On Thursday, Nvidia shares rose almost 25 percent. That means the market value of the company increased by just under $190 billion, which was close to a Wall Street record.

– It is sick. I have gone through the database, and Apple had the previous record of 191 billion dollars, said Nordea’s investment director Robert Næss to DN at the stock exchange opening.

In 2023, Nvidia shares have risen 160 percent, driven mainly by optimism related to the company’s role in the development of artificial intelligence (AI). The company is now the world’s sixth most valuable company, with a market value of 940 billion dollars, or well over 10,000 billion Norwegian kroner.

– Nvidia is in the middle of nowhere when it comes to artificial intelligence. The share is highly priced, but that is also because the price has gone up a lot without the estimates having come up. If you believe that the market was efficient before the quarterly report came out, the only thing missing would be for the share to rise 25 per cent, says Næss.

Nvidia lifted the entire stock market on Thursday. This is what it looked like for the leading stock market indices when trading closed:

• Industry-heavy Dow Jones fell 0.1 percent
• The technology-heavy Nasdaq Composite rose 1.7 percent
• The S&P 500 rose 0.9 percent

Downgrading

The rise on Wall Street comes after two days of falls. Investors have been cautiously concerned about the US debt ceiling, where negotiations between Republicans and Democrats are still ongoing. Republican Kevin McCarthy, who is the Republican leader in the House of Representatives, says he has faith in a deal.

After the US markets had closed on Wednesday afternoon, and before Asia opened on Thursday morning, Fitch Ratings issued a warning that it has placed the US credit rating on watch with a negative outlook.

– Rating Watch Negative reflects increased political polarization that prevents an agreement to raise or suspend the debt ceiling, even as the x-date is fast approaching, writes Fitch, referring to the date when the US Treasury runs out of money and can no longer meet its obligations theirs or incur new debts.

Fitch believes it is still most likely that there will be a solution before the so-called x-date, which is probably 1 June. However, the credit rating company is clear that the risk that there will not be an agreement before the deadline has increased.

– We believe that the risk that the debt ceiling will not be raised, or suspended, has increased, and that the US may fail to meet the deadlines for some of its obligations, writes Fitch.

The competing credit rating companies S&P Global Ratings and Moody’s Investors Service have not issued similar warnings. S&P Global Ratings received criticism in 2011 when it downgraded the US AAA rating when there was a risk of default. At the time, the stock market fell considerably.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For further terms see here.