(Reuters): Nvidia inched closer to US$2 trillion market value after the bellwether for AI chip demand once again exceeded Wall Street’s sky-high expectations, re-igniting a global rally in tech stocks.

The chipmaker returned as the third most valuable U.S. company as its shares jumped 12.5 per cent to a record high of US$760.71 on Thursday. If gains hold, Nvidia will add about US$210 billion to its market capitalisation.

Its shares have jumped nearly 36 per cent this year to become the top performing S&P 500 stock, while playing a crucial part in the benchmark index climbing record highs in 2024.

“The people who made the most money in the gold rush of the mid-1800s were the ones providing the tools to get the job done, not those hunting for the precious metal,” said Russ Mould, investment director at AJ Bell.

“Nvidia is effectively playing the same role today in this tech revolution.”

If Nvidia hits the US$2-trillion mark, it would achieve the milestone at the fastest pace ever by adding US$1 trillion in just about nine months.

Soaring demand for Nvidia’s chips used by companies rushing to upgrade their AI offerings helped the Silicon Valley firm forecast a whopping 233 per cent growth in first-quarter revenue, above market expectations of a 208 per cent rise.

Gains in Nvidia lifted aspiring AI competitor Advanced Micro Devices 6.5 per cent, while Super Micro Computer surged 17 per cent and Arm Holdings rose 11 per cent. The Philadelphia chip index added nearly 4.0 per cent.

The rally in chip stocks added 2.0 per cent to the Nasdaq Composite, while sending European and Japan’s Nikkei share average to record highs.

Nvidia, which controls about 80 per cent of the high-end AI chip market, reported fourth-quarter revenue jump of more than threefold from a year ago to US$22.10 billion.

Robust demand for its graphic processing units from massive datacentres in the middle of an AI upgrade has been bolstering its revenue growth for three quarters.

Analysts, however, worried that U.S. curbs on chips sales to China may be hurting its revenue growth. Sales in China amounted to about 9.0 per cent of Nvidia’s fourth-quarter sales, down from 22 per cent in the prior quarter.

The company trades at about 29 times its earnings expectations for the next 12 months compared to an industry median of 25.3, according to LSEG data. A year ago the valuation multiple was at 47.

Rapid increases in analysts’ earnings estimates imply that its forward earnings valuation has fallen even as its share price rises further.

“We’ve gotten well ahead of expectations and baked in a lot for the next three years,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest.

At least 17 brokerages raised their price targets after results.

Rosenblatt Securities was the most bullish with a future price estimation of US$1,200, which implies that Nvidia will hit US$3 trillion market capitalisation over the next 12 months.