Last week, NVIDIA Corporation(NVDA.US) became the first company to achieve a market capitalization of $4 trillion, surpassing Apple's previous record of $3.915 trillion set at the end of 2024.

The stock has risen over 27.13% this year and has surged more than 1000% since the beginning of 2023.

Wall Street Boosts Price Targets

Wall Street analysts quickly raised their price targets, with the highest set at $250. Nvidia announced the lifting of restrictions on its H20 GPU sales in China, following U.S. government assurances that licenses will be granted. This decision reverses previous limitations that impacted earnings by $4.5 billion in Q1. AMD also benefits from the reopened $50 billion Chinese market. CEO Jensen Huang emphasized AI innovation's reliance on U.S. technology during recent visits to Beijing and Washington, D.C.

The news prompted several analysts to boost their price targets, including Oppenheimer, which raised it to $200 from $175, Melius Research to $235 from $200, and DZ Bank increased it by $30 to $195.

According to FactSet, Loop Capital analyst Ananda Baruah set the highest Wall Street target for Nvidia at $250. If Nvidia's stock reaches this target, its valuation will hit $6 trillion.

Nvidia's Return to China: A Major Boost

Melius Research analyst Ben Reitzes noted, "Nvidia getting back in China after a mid-April ban is a huge tailwind." He anticipates that the lost $8 billion quarterly run rate in China sales could fully recover by fiscal Q4 2026, boosting fiscal 2027 revenue growth to 38% year-over-year after 59% growth in fiscal 2026.

However, Piper Sandler analysts expect Nvidia to feel the effects of the restrictions in its Q2 earnings, estimating an $8 billion revenue impact in the July quarter.

Historical Market Cap Milestones

Nvidia has shown impressive growth, joining the trillion-dollar market cap club on May 30, 2023. Despite a 3.63% dip a week later, it rebounded with a 5.47% increase a month after. After 1 year, Nvidia's market value surged by 175.50%.

On February 23, 2024, Nvidia surpassed $2 trillion, experiencing a 0.71% increase within a week, followed by a 22.75% rise over the next month. By year-end, its market cap grew by 75.06%.

On June 5, 2024, Nvidia reached $3 trillion, with a 2.26% increase in the following week and a 2.78% rise over the month. A year later, its market cap climbed by 14.37%.

As a key player in the AI revolution, Nvidia's long-term returns after each market cap milestone are promising. However, past performance does not guarantee future results, and investors should be mindful of the semiconductor industry's cyclical volatility risks.

Potential Catalysts for Further Growth

Nvidia's recent stock surge is driven by commitments from major clients like Microsoft Corporation(MSFT.US), Meta Platforms(META.US), Amazon.com, Inc.(AMZN.US), and Alphabet Inc. Class C(GOOG.US) to increase AI spending, indicating robust demand for Nvidia's computing systems. These four tech giants contribute over 40% of Nvidia's revenue. Bloomberg analysts expect their capital expenditures to rise to $350 billion over the next few fiscal years, up from $310 billion this fiscal year. IDC projects global spending on AI infrastructure to exceed $200 billion by 2028.

Art Hogan, Chief Market Strategist at B Riley Wealth, remarked that Nvidia has evolved from a gaming chip manufacturer to a leader in AI computing power, emerging as a clear early winner in the AI sector.

Brian Mulberry, Client Portfolio Manager at Zacks Investment Management, noted the immense market demand for Nvidia's chips, essential for advancing AI. Since April, Nvidia's stock has rebounded sharply, refocusing market attention on AI. "The performance over the last 90 days has been outstanding."

Ken Mahoney, President of Mahoney Asset Management, believes the recently started U.S. earnings season could further boost Nvidia's stock. He noted that investors will watch if Nvidia exceeds expectations and raises guidance, with its current P/E ratio around 33x, still below its ten-year average, indicating room for growth.

The U.S. Q2 earnings season began on July 15. Goldman Sachs expects S&P 500 earnings growth to slow sharply to just 4%, a two-year low, mainly due to margin contraction. While cyclical industries may see declines, strong performances from tech giants will offset some negative impacts.

Goldman Sachs projects 18% earnings growth for the IT sector, including NVIDIA Corporation(NVDA.US), Apple Inc.(AAPL.US), and Microsoft Corporation(MSFT.US), and 28% growth for the communication services sector, including Alphabet and Meta, supporting overall S&P 500 earnings growth.