Nvidia Stock Jumps 4% to All-Time High on AI Chip Dominance

Nvidia's stock price surged by 4% on Wednesday, reaching a new all-time high. This significant increase occurred while the broader market showed minimal movement, with the S&P 500 edging up by just 0.08%, the Nasdaq Composite gaining 0.2%, and the Dow Jones dropping 99 points. Nvidia's performance has been particularly strong since its May 28 earnings report, which exceeded Wall Street forecasts. Since then, Nvidia’s shares have jumped over 12%, outperforming the S&P 500’s 3.6% gain during the same period. This rise is notable given the company's ongoing challenges with new US restrictions on chip exports to China, one of its major markets.

The strong movement in Nvidia shares was driven by growing investor confidence, with analysts highlighting the company’s dominance in AI chips as a key factor. Ananda Baruah, an analyst, raised his price target for Nvidia to $250, the highest on Wall Street. Baruah noted that Nvidia remains essentially a monopoly for critical tech, with significant pricing and margin power. He also predicted that the AI chip market could hit $2 trillion by 2028. If Nvidia reaches the $250 level, the company’s market cap would be around $6 trillion, up from the current $3.6 trillion.

The overall market hovered near record territory on Wednesday, with the S&P 500 trading less than 1% below its intraday high and staying close to its all-time closing high. The Nasdaq also remained 1.3% under its December peak. This week’s market strength has been partly attributed to the Middle East ceasefire between Iran and Israel, which eased worries about global oil supply. The S&P 500 has risen more than 2% this week following these developments. However, the ceasefire has been shaky, with both Israel and Iran accusing each other of violations. Despite this, investors appeared relieved that no major escalation followed.

Earlier this year, fears of rising US tariffs had pushed the S&P 500 almost 20% below its peak, with many expecting a global slowdown. However, recent labor and inflation figures have kept those concerns in check, and some traders are betting the Fed might eventually step in with support. Despite Nvidia’s climb, the rest of the tech sector is not celebrating. Only 5 out of 69 tech stocks are up since February 18, with the median stock down 5.5% and the average stock down 7%. Despite this, the tech sector is still up 5.7% this year and has rallied 14.5% over the past three months, thanks mostly to excitement over AI.

Investors also looked at new home sales data, which came in at the lowest level since October 2024. This did not significantly move markets but added another layer of caution. Federal Reserve Chair Jerome Powell returned to Capitol Hill for a second day of testimony, stating that managing the risk of inflation is a priority. Powell refused to specify when the Fed might cut rates, despite pressure from the administration.