AI chipmaker Nvidia (NVDA) has officially joined the Dow Jones Industrial Average (^DJI), cementing the tech giant’s importance in the age of artificial intelligence.
As of Friday afternoon, Nvidia was on track to post a gain of about 9% for the week, despite a sharp decline in chip stocks. The surge this week made the company overtake Apple (AAPL) as the world’s most valuable company, with a market cap of $3.6 trillion, surpassing Apple’s $3.4 trillion.
“Many of us on Wall Street talk about the S&P 500 (^GSPC) or the Nasdaq (^IXIC), but the truth is that most Americans know the Dow,” Ritholtz Wealth said. Carrie Cox, chief market strategist at Management, said in an interview with Yahoo Finance on Friday. Nvidia and everything it means to this AI story. ”
The AI chip market is expected to grow 99% in 2024 and another 74% next year, according to International Business Strategies, a consulting firm that tracks industry data.
Nvidia has repeatedly disproved fears of a so-called AI bubble and shows no signs of slowing down. CEO Jensen Huang touted “insane” demand for the company’s chips.
About 90% of analysts recommend Nvidia stock as a buy, and expect the stock to reach $149.38 over the next 12 months, according to Bloomberg consensus forecasts. The stock price on Friday was $147.36.
Meanwhile, Intel (INTC), the former tech company that Nvidia replaced as a Dow stock, has investors wary of ongoing production issues and bleak financials, and doubts whether its turnaround plan will be successful. As a result, it has fallen by nearly 50% since the beginning of 2024.
In President Trump’s second term, Nvidia, like the rest of the AI chip market, could face hurdles such as high tariffs on Chinese products and escalating trade tensions. The president-elect has proposed imposing tariffs of 10% to 20% across the board and 60% on imports from China, levels not seen since the Great Depression. . Nvidia works with TSMC (TSMC34.SA) to manufacture chips in Taiwan, and TSMC uses components from China to manufacture these chips.
“Trump’s victory creates further uncertainty for the semiconductor sector in terms of additional regulations on China, increased tariffs, and the impact on CHIPS Act funding,” Jefferies analysts said in a note Friday. “There is,” he said.
DA Davidson analyst Gil Luria told Yahoo Finance in an interview this week that “any global supply chain disruption would be a problem for NVIDIA, as it would be a problem for TSMC.”
The company is scheduled to announce its quarterly results on November 20th.
Laura Bratton is a reporter for Yahoo Finance. X Follow her at @LauraBratton5.
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