$NVIDIA (NVDA.US)$ The stock price on Monday (October 14) once again hit a new all-time closing high after four months. This irreplaceable chip manufacturer in the AI era seems to be poised to surpass Apple again to become the world's highest market cap company.

Due to investors betting on the strong demand for its current and next-generation AI chips, Nvidia's stock price rose by 2.4% on Monday, closing at $138.07. The latest increase has raised Nvidia's market cap to $3.39 trillion, slightly below Apple's $3.52 trillion, but higher than Microsoft's $3.12 trillion.

In June of this year, Nvidia once surpassed Microsoft and Apple, becoming the world's most valuable company. Later, although Apple reclaimed the top spot, the market values of these three tech giants have been relatively close in the past few months. Nvidia, Apple, and Microsoft together account for about one-fifth of the S&P 500 index's weight, so their performance has a significant impact on the daily ups and downs of this index.

Currently, Nvidia has risen by nearly 14% this month and remains the second best-performing stock in the S&P 500 index for the year.

In the fierce competition for emerging artificial intelligence technology among major technology companies such as Google, Microsoft, Amazon, and others, NVIDIA, playing the role of a "seller of shovels," has emerged as the biggest winner on Wall Street. TD Cowen analysts wrote in a report on Sunday: "We believe that major companies in the artificial intelligence field... are facing a prisoner's dilemma investment environment - each company has the incentive to continue spending, as the cost of not doing so could be devastating."

And behind this game, it is clearly beneficial to NVIDIA. TD Cowen recently reiterated a target price of $165 for NVIDIA, calling it a "preferred" investment and stating that the market demand for the company's current generation of AI chips remains strong.

The market still has full confidence in NVIDIA.

NVIDIA confirmed in August that reports of production ramp delays for its upcoming Blackwell chip would be delayed until the fourth quarter, but downplayed the impact, stating that customers are rushing to purchase existing chips. NVIDIA CEO Jensen Huang stated earlier this month that NVIDIA's Blackwell chip has been in full production and that market demand is "insanely high."

A report released by Morgan Stanley analysts last week after meeting with management stated that orders for the Blackwell chip are "backed up about 12 months," and "all signs indicate that the business remains strong, with very bright prospects."

These comments reinforce the viewpoint that NVIDIA remains the preferred target for investment in the AI field, especially as major companies continue to focus on their artificial intelligence plans. For example, according to an analyst consensus compiled by the media, Microsoft is expected to increase capital spending by nearly a third in the 2025 fiscal year, reaching about $58 billion.

Zehrid Osmani, a portfolio manager at Martin Currie Investment Management, said: "People had questioned the impact of the production delay in the (Blackwell chip), so these new developments are reassuring."

In addition to the optimistic sentiment towards the Blackwell chip itself, recent sales figures from Taiwan Semiconductor show strong market demand for AI chips. OpenAI's latest round of funding has pushed the company's valuation to $157 billion, and OpenAI recently released an AI model with reasoning capabilities (Google is also researching similar models). These bullish news in the AI and chip sectors indirectly boost confidence in NVIDIA's prospects.

On Monday, other AI chip and hardware stocks in the US stock market, such as ARM, Qualcomm, Broadcom, Super Micro Computer, and Micron, all rose, with the stock price of Taiwan Semiconductor reaching a new historic high along with Nvidia on Monday's close.

Gabelli Funds portfolio manager John Belton stated that these events "have rekindled people's interest in the AI field, and people are very excited about use cases based on inference artificial intelligence. Inference represents a new territory for Nvidia, and considering its computational intensity, this could be a significant new product category."

Belton currently continues to view Nvidia as a core holding and believes that AI will bring "stable demand" over the years. "This is not an undiscovered stock, but if it can achieve the expected numbers, the valuation is still reasonable."

It is worth noting that the options market recently flashed signs of optimism about Nvidia's prospects. Last Thursday, there was a surge in buying Nvidia call options, where call option holders can purchase over 30 million shares of Nvidia at a price between $150 and $189 by March next year. This range is 8.6%-36.9% higher than Nvidia's Monday closing price.

According to data compiled by industry media, analysts currently expect Nvidia's revenue to more than double in the current fiscal year, and to grow by another 44% in the next fiscal year. Over the past quarter, the market has continuously raised its expectations for Nvidia's earnings and profits.

Nvidia's strong profit growth prospects make its valuation metrics no longer as frighteningly high, actually aiding further buying from the bulls. The company's forward PE ratio is currently around 37 times, indeed at a premium compared to the Nasdaq 100 index, but lower than Nvidia's nearly five-year average level, as well as below the peak forward PE ratio of over 44 times in June.

Editor/Somer