Nvidia shares closed at an all-time high of $208.27 on Friday, pushing the chipmaker’s market capitalisation past $5 trillion for the second time in its history. The stock gained 4.3% in a single session, adding more than $200 billion in value.

Why it matters: Nvidia’s valuation now exceeds the GDP of Japan. The company’s trajectory reflects the scale of corporate spending on artificial intelligence infrastructure, but sceptics question whether the returns will justify the investment.

What drove the rally

The catalyst was Intel. The struggling chipmaker reported quarterly earnings of 29 cents per share late Thursday, far exceeding the consensus estimate of just one cent. Revenue came in at $13.58 billion, beating expectations by 9.3%.

Intel shares surged 24%, their best single-day performance since 1987. The result signalled that demand for semiconductors is broadening beyond Nvidia’s dominant AI accelerators into Intel’s server and networking products.

The broader semiconductor surge

The Philadelphia Semiconductor Index, known as the SOX, extended its winning streak to 18 consecutive sessions. Broadcom, Taiwan Semiconductor, AMD, and Micron all rose alongside Nvidia.

Nvidia is now worth $1 trillion more than Alphabet, the second-largest company by market capitalisation. The chipmaker’s stock has risen more than 14-fold since the end of 2022.

The bull case

Supporters argue that Nvidia’s dominance in AI training chips is durable. Google, Microsoft, Meta, Amazon, OpenAI, and Anthropic all rely on Nvidia’s graphics processing units. Data centre spending by the five largest cloud providers is expected to exceed $300 billion in 2026, according to analyst estimates.

Next week’s earnings from Microsoft, Meta, and Amazon will provide the latest signal on whether that spending is accelerating or plateauing.

The bear case

Critics point to several risks. Nvidia trades at roughly 35 times forward earnings, a valuation that assumes sustained revenue growth above 40% annually. The emergence of competitors, including AMD’s MI400 series and custom chips from Google and Amazon, could erode margins.

Geopolitical risk also looms. US export controls restrict Nvidia’s sales of advanced chips to China, its second-largest market. Any tightening of those restrictions would hit revenue.

What happens next

Investors will watch hyperscaler earnings next week for clues about capital expenditure plans for the second half of 2026. Any signal that AI infrastructure spending is decelerating could test whether Nvidia’s $5 trillion valuation holds.