Nvidia Stock Rides the AI Wave With More to Come
The world’s most valuable chipmaker has defied the Fed and recession threats to become the ultimate story stock — one that can elbow its way in on just about any good market narrative.
The Nvidia play works in almost every scenario. Gaming boom? Check. Cloud computing? Yes. How about crypto mining or self-driving cars? Yep, still Nvidia.
Photographer: Justin Sullivan/Getty Images
Go back two years and the US stock market was littered with tech juggernauts that surged to wild market capitalizations amid extraordinary government stimulus and good narratives. Everyone thought that the story-stock market died when the Federal Reserve started raising interest rates, but chipmaker Nvidia Corp. has defied that logic to become the market’s ultimate story stock — that rare bird that’s capable of riding a good yarn to retina-burning valuations even amid tight monetary policy and a potentially looming recession.
Nvidia, of course, has become the darling of the generative artificial intelligence boom that started with the launch of OpenAI’s ChatGPT in November. With its 25% post-earnings surge on Thursday, the stock is now up 161% this year on the promise that the company’s chips will power the future of AI. So what kind of sorcery is this? And why are investors willing to pay 186 times current earnings to get a piece of it?