Nvidia (NVDA) shares fell in early trading Thursday after a roaring rally saw the company surpass a $3 trillion market cap for the first time.
Nvidia’s share price opened at $1,240.09 per share before falling about 0.4% in morning trading.
Wednesday’s stock moves pushed the chip giant past Apple, making it the second most valuable company on the U.S. stock market before the initial pullback. Microsoft currently holds the top spot.
The rally came amid a broader gain in technology stocks, with weaker U.S. economic data and a decline in Treasury yields buoying markets on hopes the Federal Reserve could cut rates as early as July.
Nvidia has been the poster child for investor enthusiasm for AI, which accelerated with OpenAI’s launch of ChatGPT in late 2022.
Shares are up more than 140% this year and 200% last year; Nvidia shares have risen more than 3,300% in the last five years. During these same periods, the Nasdaq gained a modest 14%, 29%, and 126%, respectively.
Nvidia shares were flat in premarket trading on Thursday, up less than 1%
This week’s rally at Nvidia follows an announcement on Sunday by its CEO, Jensen Huang, who said at an industry conference that the company will launch a high-power version of its Blackwell chip – called Blackwell Ultra – in 2025, followed by a new AI chip platform, Rubin, in 2026. The company will launch an Ultra version of Rubin in 2027.
Nvidia is the technology industry’s preferred supplier of AI chips and embedded software.
Tech giants including Amazon (AMZN), Google (GOOG), Meta (META), Microsoft, Tesla (TSLA) and others use their hardware to power everything from their cloud-based AI offerings for customers to their own models of AI and Services.
In the first quarter, Nvidia reported adjusted earnings per share of $6.12 on revenue of $26 billion, jumps of 461% and 262%, respectively, from the same period a year ago.
Nvidia’s data center revenue for the most recent quarter increased 427% year over year to $22.6 billion, representing 86% of the company’s total revenue for the quarter. Nvidia’s gaming segment, which was previously its most important business, reported revenue of $2.6 billion.
Nvidia also announced that its shares would be split 10 for 1 on June 7, and the company would increase its dividend from $0.04 per share to $0.10 per share.
But Nvidia isn’t the only game in town.
AMD (AMD) and Intel (INTC) are pushing ahead with their own AI chips with the aim of overtaking Nvidia. AMD recently announced that its MI325X and MI350 will hit the market in 2024 and 2025, respectively, and said that its next-generation MI400 AI accelerator platform will arrive in 2026.
Meanwhile, Intel said its Gaudi 2 and Gaudi 3 AI accelerators will undercut competing chips in price. And with companies spending billions on AI chips, any price savings will certainly be welcome.
Nvidia is also facing increasing competition from its own customers as Amazon, Google and Microsoft seek to free themselves from dependence on the company’s chips and save on capital expenses while doing so.
For now, though, Nvidia continues to maintain its grip on the AI space, and will do so for the foreseeable future.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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