Silicon Valley’s Nvidia Corp is set to become the first chipmaker to reach a valuation of $1 trillion, following a stunning sales forecast and soaring demand for its artificial intelligence (AI) processors.
Nvidia’s shares soared by 23% on Thursday morning in New York after it announced an $11 billion sales forecast for the next quarter, exceeding Wall Street’s estimates by more than 50%.
This announcement added a whopping $170 billion to Nvidia’s market value, more than the entire value of Intel or Qualcomm. According to Bloomberg, this incredible increase constitutes the most significant one-day gain for a US stock ever.
With its market cap sitting at $927.2 billion, Nvidia is now edging closer to joining the exclusive trillion-dollar club that includes the likes of Apple, Microsoft, Alphabet, Amazon, and Saudi Aramco.
The Big Chip-Makers in Town
Nvidia’s recent successes are attributed to the skyrocketing demand for cutting-edge tech across various industries. The firm’s H100 processor is in high order by big tech companies and a new wave of AI startups such as OpenAI and Anthropic.
These startups have raised billions in venture funding over recent months, putting Nvidia in a strong position in the growing AI market.
“Our chips and allied software tools are the picks and shovels of a generational shift in AI,” said Geoff Blaber, CEO of CCS Insight. “Nvidia provides a comprehensive toolchain that no other company currently matches,” he added.
The AI hype doesn’t stop with Nvidia; shares of AMD, a firm that produces specialized chips for AI, jumped 8% in early trading.
Microsoft and Google saw shares climb too. However, not everyone shared in the excitement. Intel’s shares fell 5% in early trading due to its perceived lagging in the AI transition.
Last year’s worries about a potential slowdown in cloud spending following a tech boom during the pandemic have been replaced by a frenzied enthusiasm for a new generation of AI. Pioneers in this space include chatbots like OpenAI’s ChatGPT and Google’s Bard.
However, even as tech giants like Amazon, Google, Meta, and Microsoft invest in their own AI chips, analysts say only some can match Nvidia’s technological advantage.
Nvidia CEO Jensen Huang emphasizes that Nvidia is well-positioned for the AI revolution, thanks to 15 years of steady investment and production expansion.
“With generative AI becoming the primary workload of most of the world’s data centers… it’s apparent now that a data center’s budget will shift very dramatically towards accelerated computing,” Huang stated.
Despite past market fluctuations with earlier AI technologies and cryptocurrencies, Nvidia’s current success is a testament to the company’s resilience and potential. As it stands, Nvidia is in the right place at the right time, poised to lead the next generation of AI innovation.