Surging 59% this year! AI "shovel seller" NVIDIA's market value approaches $2 trillion, causing short sellers to lose $3 billion overnight.

Zhitong App has learned that NVIDIA (NVDA.US) is set to become the first semiconductor company with a valuation of $2 trillion, marking another milestone after being the biggest beneficiary of the artificial intelligence (AI) boom in the past year.

Before the U.S. stock market opened on Friday, NVIDIA's stock price rose by 2.7%, following a surge of over 16% in the previous trading day, skyrocketing its market value by $277 billion to $1.96 trillion, setting a record for the largest single-day market value increase in U.S. stock market history. NVIDIA's stock price has risen by 59% since the beginning of this year, solidifying its position as the fourth largest company in the world by market capitalization. NVIDIA's market value is only surpassed by Microsoft, Apple, and Saudi Aramco.

NVIDIA previously announced explosive performance results, reinforcing Wall Street's bet on its potential in AI technology. Boosted by AI spending from major clients like Microsoft and Meta, this chip manufacturer's performance guidance has also exceeded expectations.

The latest performance and guidance prove that NVIDIA remains undoubtedly the "strongest shovel seller" in the global AI field.

NVIDIA sets a record for the largest single-day market value increase in U.S. stock market history

Short sellers suffer a "severe blow"

According to an analysis report by S3 Partners LLC, NVIDIA's stock price surged on Thursday, causing short sellers to incur approximately $3 billion in paper losses, which the company referred to as a "nightmare for bearish traders."

According to S3's data, NVIDIA is the third largest company in the U.S. that has been shorted, with borrowed and sold stocks totaling $18.3 billion.

Ihor Dusaniwsky, Managing Director of S3's Predictive Analytics Department, wrote in the report: "For many short sellers seeking to reduce positions after NVIDIA's earnings report, paper losses are inevitable." "Short sellers may wait for a while to find more favorable exit points."

The rise in NVIDIA's stock price has led to a general increase in the entire U.S. chip industry. S3 data shows that short sellers incurred a single-day paper loss of $4.3 billion on semiconductor stocks. The semiconductor industry has been the worst-performing sector for short sellers this year, with losses of $7.2 billion in market value in February alone.

Some investors believe that NVIDIA's substantial gains will reinforce people's strong optimism about AI spending, proving that the significant increase in stock price is justified.

The Philadelphia Semiconductor Index rose by nearly 65% in 2023 and has increased by 12% this year.