Nvidia races towards the $1tn club as AI frenzy boosts chip stocks

Nvidia’s blowout earnings report set the Silicon Valley company on course to become the first chipmaker to be valued at more than $1 trillion, as rising demand for its artificial intelligence processors lifted semiconductor shares higher on Thursday.

Nvidia shares were up 25 percent in pre-market trading after forecasting $11 billion in sales for the three months ending in July, beating Wall Street’s previous estimates by more than 50 percent.

According to Bloomberg data, if the move continues in regular trading hours, Nvidia could add nearly $200 billion to its market capitalization, more than the entire value of Intel, AMD or Qualcomm and the most ever for a US stock. Big one day profit. The growth will propel it into an elite group of companies valued at more than $1 trillion within $50bn, joining Apple, Microsoft, Alphabet and Amazon.

Along with Nvidia, chip suppliers including Taiwanese maker TSMC and Dutch equipment maker ASML posted the biggest gains, up 3.5 percent and 5 percent, respectively.

Wednesday’s results bolstered Nvidia’s claim to be the only company whose technology is capable of meeting demand from across the industry to create generative AI, systems capable of creating human-like content. The group pointed to “exponential growth” in demand for computing power from cloud and Internet companies as well as the automotive, financial services, healthcare and telecommunications industries.

Products including Nvidia’s most powerful H100 processor are sought after not only by big tech companies, but also by a new wave of AI start-ups like OpenAI and Anthropic, which have raised billions of dollars in venture funding in recent months.

“We are clearly seeing huge growth in AI demand, and Nvidia is at the forefront of that,” said Geoff Blaber, chief executive of tech consultancy CCS Insight. “A generational shift in AI”. “They are definitely in a dominant position because they provide a very comprehensive toolchain that no other company is currently capable of.”

AMD, which like Nvidia makes specialized chips best suited for training on vast sets of data for AI, climbed 9 per cent in pre-market trading, while US memory chip supplier Micron, which has announced new plans amid rising tensions in China, Faces trade sanctions. The US jumped 4 percent ahead of the open. Shares of Microsoft and Google also gained momentum.

Several American and Japanese equipment suppliers to chip makers also grew. Tokyo Electron climbed 3 per cent, while Tokyo-based Adventest, a maker of semiconductor testing kits, was up 16 per cent. In the US, Applied Materials and Lam Research were slightly higher in pre-market trades.

However, Intel — seen by investors as a laggard in the transition to AI — fell 1 percent ahead of the market open, as investors bet that AI will accelerate a fundamental shift in datacenter technology from cloud providers such as Microsoft, Amazon and Google. Will give With internet groups including meta.

Even before Thursday’s move, Nvidia shares were poised to double in 2023, as last year’s concerns about a slowdown in cloud spending after a pandemic-era jump by Big Tech fueled frenzied enthusiasm for a new generation of AI. Paved the way, led by chatbots like OpenAI. ChatGPT and Google’s Bard.

Even as Amazon, Google, Meta and Microsoft all invest in their own custom chips for AI, analysts said few companies can match Nvidia’s technological advantage.

In recent years, Nvidia’s stock has risen and fallen in tandem with previous waves of hype around cryptocurrencies and previous generations of AI such as autonomous driving that failed to deliver on their initial promise.

But Nvidia Chief Executive Officer Jensen Huang said on a Wednesday call with analysts that 15 years of investment and production capacity expansion left Nvidia in the right place at the right time when ChatGPT marked a major investment by the world’s richest companies. started the cycle.

“When generative AI came along, it launched a killer app for this computing platform that has been in the making for some time,” he said.

“With Generative AI becoming the primary task of generating information for most of the world’s data centers, it is now very clear that . , , Data center budgets will shift dramatically toward accelerated computing, and you’re seeing it now.