Nvidia has become the first chipmaker to reach a $1 trillion valuation, sparking enthusiasm across Wall Street for a company that could benefit from the latest developments in artificial intelligence.
Its shares rose more than 4 percent to $406.1 in early New York trading on Tuesday after Chief Executive Jensen Huang unveiled a new supercomputer on Monday and formed a new AI alliance with companies including WPP and SoftBank.
The moves gained new momentum after Nvidia impressed investors and analysts last week, predicting that its sales would rise to $11 billion in the three months to July, topping Wall Street’s previous estimates. More than 50% are predicted.
Silicon Valley-based Nvidia began targeting the niche market of 3D computer graphics 30 years ago. Its chips power AI applications including OpenAI’s breakthrough chatbot ChatGPT, as big tech companies and cloud computing providers race to upgrade their data center technology for what Jensen Huang announced on Monday as “the dawn of a new era of computing.” turning point”.
High-performance chips like Nvidia’s H100 have become key to building generative AI systems capable of creating text and images that closely resemble those generated by humans. Generative AI promises to unleash new types of productivity tools, but it also has the potential to transform jobs in industries like media and education.
Nvidia’s $1 trillion market cap puts it among an elite group of U.S. stocks dominated by big tech companies like Apple, Microsoft, Amazon and Google parent Alphabet.
Meta hit the $1 trillion milestone in June 2021, when it was still known as Facebook, but fell below that threshold just a few months later. In November, Amazon became the first public company to lose $1 trillion in market value amid a broader sell-off in tech stocks last year.
Nvidia’s stock has halved in 2022 as investors worry about slowing corporate spending on data centers and pandemic legacies in the gaming and cryptocurrency markets. But Tuesday’s move follows a 25% jump in Nvidia’s stock price last week, bringing its gains so far in 2023 to more than 180%.
Analysts at Jefferies calculate that quarterly revenue from Nvidia’s data center business will exceed combined sales of Intel and AMD’s central processing units — the traditional workhorse of the servers that power the world’s largest internet service — that are still underrepresented in that market. This is the first time.
Morgan Stanley last week described Nvidia’s outlook upgrade as “the largest dollar revenue increase in industry history,” adding: “We simply have no historical precedent for the magnitude of this step function.”
Shares of other companies seen as benefiting from the shift to artificial intelligence have also soared this year, including Microsoft, Palantir and AMD.
Experts, however, are concerned about the rise of artificial intelligence. The new technology is so powerful that “mitigating the risk of AI extinction should become a global priority alongside other societal-scale risks like pandemics and nuclear war,” a group of scientists warned Tuesday.