Nvidia’s Worth Briefly Surpasses Amazon

Four years ago, Nvidia Corp. barely registered among the top 20 U.S. companies by market capitalization. Now, it’s closing in on Amazon.com Inc., aiming for the No. 4 spot. During Monday’s trading session, Nvidia briefly surpassed Amazon in valuation, although it didn’t maintain the lead by the closing bell. Nvidia closed with a $1.785 trillion valuation, slightly below Amazon’s $1.790 trillion, per Dow Jones Market Data.

Nvidia’s valuation peaked at $1.843 trillion on Monday, a significant shift from April 2002 when it last outpaced Amazon. This climb illustrates Nvidia’s dominance in the AI hardware market and Wall Street’s growing confidence in its momentum. Analysts are increasingly optimistic about the company’s future, despite past concerns about supply constraints.

Melius Research analyst Ben Reitzes noted investors’ growing conviction in Nvidia’s prospects, attributing the recent stock gains to this optimism. Beyond its core AI graphics processing units, Nvidia’s AI enterprise software and networking offerings are gaining recognition, contributing to its market success. Over the past year, Nvidia’s stock has soared by nearly 250%, while Amazon’s has seen a more modest increase of around 80%.

The consistent upward trend in Nvidia’s stock reflects a broader sentiment that things are looking positive for the company, both in the immediate future and in the long term. With its expanding market cap and diverse product offerings, Nvidia is poised to continue challenging the giants of the tech industry.

Evercore ISI’s Julian Emanuel is sounding the alarm about Nvidia’s remarkable rally, suggesting it’s igniting a fear of missing out (FOMO) among investors. Speaking on CNBC’s “Fast Money,” Emanuel noted a shift in client sentiment, with many expressing more concern about being underinvested than overexposed. This sentiment, he says, hasn’t been observed since 2021, signaling a potential warning sign for the market.

In his recent note, Emanuel drew parallels to the Y2K era, highlighting similarities in momentum dynamics. He attributes the current excitement to advancements in artificial intelligence and optimism surrounding the U.S. economy’s ability to stave off a recession. While acknowledging the prevailing bullish sentiment, Emanuel advises investors to prioritize risk management over reward chasing, particularly as stocks continue to reach new highs. He suggests exercising caution, anticipating a potential 13% pullback this year, which he views as normal during a non-recessionary period.

Despite his cautionary stance, Emanuel hasn’t completely shunned growth opportunities. He expresses favor toward communication services, recognizing their defensive properties amidst market volatility. Additionally, he highlights consumer staples, healthcare, and money markets as top picks, emphasizing the stability they offer in uncertain times. Emanuel’s outlook for the S&P 500 suggests a modest decline, with a year-end target of 4,750, indicating a roughly 5% decrease from current levels.