What is fueling the surge behind Nvidia’s $1 trillion rally?

Nvidia has recently experienced a significant market rally, surpassing a $1 trillion market capitalization increase in just two months. This surge has cemented the company’s position as a leader in the AI revolution, fueled by a growing demand for its advanced chips. Analysts are responding to this surge by raising price targets and investors are flocking to the stock, propelling it to new record highs. However, amid geopolitical tensions, insider stock sales, and high expectations, the sustainability of this rally remains in question.

Several key factors have contributed to Nvidia’s impressive rebound. The company’s dominance in AI hardware, particularly with its Blackwell architecture and GeForce RTX 50 series GPUs, has positioned it at the forefront of the AI boom. In Q1 FY2026, Nvidia reported strong financial results, with revenue reaching $44.1 billion, marking a 12% increase from the previous quarter and a 69% rise year-over-year. Data center revenue alone soared to $39.1 billion, reflecting a 73% increase from the previous year.

Analysts have expressed confidence in Nvidia’s future prospects, with Jefferies including the company in its list of highest-conviction stock picks. They anticipate the upcoming launch of Nvidia’s new Blackwell AI chips and project that gross margins could reach between 70% and 80% in 2025. As of June 3, 2025, Nvidia’s stock is trading at $141.79, up 3.19% from the previous close. The stock experienced a 24.1% rally in May, driven by strong earnings and positive analyst sentiment.

Various analysts have maintained their bullish outlook on Nvidia. Jefferies has a Buy rating with a $185 price target, emphasizing Nvidia’s potential in networking solutions and a smooth transition to its next-generation Rubin platform. Morgan Stanley has reiterated its Overweight rating, describing Nvidia as a “unique opportunity” in the semiconductor space and remaining the firm’s top pick despite industry headwinds. UBS has identified potential revenue boosts from the Stargate data center project in Texas, which could significantly benefit Nvidia.

Despite the positive outlook, investors should be cautious of potential risks. Geopolitical tensions, particularly related to U.S.-China trade disputes and tariffs, could impact Nvidia’s operations and supply chains. Additionally, CEO Jensen Huang’s plan to sell $800 million in shares has raised concerns, although this action is part of a pre-arranged plan to avoid insider trading issues.

In conclusion, Nvidia’s exceptional financial performance, leadership in AI technology, and positive analyst outlook make it an attractive investment opportunity. However, investors should remain watchful of geopolitical risks and insider trading activities. Overall, Nvidia appears well-positioned for sustained growth in the AI-driven future.