What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) jumped 3.7% in the afternoon session after a Reuters report indicated the US government cleared approximately 10 Chinese technology companies to purchase Nvidia's H200 AI chips.
CEO Jensen Huang was also in Beijing as part of a US trade delegation, which traders read as a signal that the commercial relationship between Nvidia and Chinese buyers may be reopening.
Adding to the optimism, several major Wall Street banks raised their price targets on the stock ahead of Nvidia's scheduled earnings report on May 20. Bank of America lifted its target to $320, Wells Fargo to $315, and UBS to $275, reflecting growing consensus that the AI infrastructure spending cycle driving demand for Nvidia's chips showed no signs of slowing.
After the initial pop the shares cooled down to $236.35, up 4.7% from previous close.
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What Is The Market Telling Us
Nvidia’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Nvidia is up 25.2% since the beginning of the year, and at $236.35 per share, has set a new 52-week high. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $16,594.
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