Nvidia gains $1tn market cap as chipmaker rides AI wave

Nvidia has become the first chipmaker to reach a $1tn valuation, sparking excitement on Wall Street for companies looking to benefit from the latest developments in artificial intelligence.

Its shares rose more than 4 percent to $406.1 in early trading in New York on Tuesday after its Chief Executive Officer Jensen Huang launched a new supercomputer and forged new AI alliances with companies including WPP and SoftBank.

Those moves provide fresh momentum after Nvidia impressed investors and analysts last week that its sales will rise to $11 billion in the three months ending in July, surpassing Wall Street’s previous forecasts by 50 percent .

Silicon Valley-based Nvidia began targeting the niche market of 3D computer graphics over 30 years ago. Its chips power AI applications, including ChatGPT, OpenAI’s breakthrough chatbot, as big tech companies and cloud computing providers race to upgrade their data center technology, which Huang on Monday called “the tipping point of a new computing era”. declared.

High-powered chips like Nvidia’s H100 have become essential for building generative AI systems capable of producing text and images that closely resemble those that humans can produce. Generative AI promises to unleash new types of productivity tools, but also threatens to shake up jobs in industries like media and education.

Nvidia’s $1tn market capitalization puts it among an elite group of US stocks dominated by big tech companies that includes Apple, Microsoft, Amazon and Google’s parent Alphabet.

Meta hit the $1tn milestone in June 2021 when it was still called Facebook, but fell below the threshold just months later. Amazon became the first public company to lose $1 trillion in market capitalization in November amid a widespread selloff in tech stocks last year.

Nvidia shares have lost half their value over the course of 2022 as investors worry about a slowdown in corporate spending in data centers and pandemic hangovers in the gaming and cryptocurrency markets. But Tuesday’s move follows a 25 percent jump in Nvidia stock in the past week, giving it a more than 180 percent gain so far in 2023.

Jefferies analysts calculate that quarterly revenue for Nvidia’s data center business will exceed combined sales of Intel and AMD central processing units — the traditional workhorses of servers that power the world’s largest Internet services — in that market. first time.

Morgan Stanley last week described Nvidia’s outlook upgrade as “the largest dollar revenue in industry history,” adding: “We have no historical precedent for the magnitude of this phase of work.”

Other companies seen as profiting from the shift to AI have also seen their shares rocket this year, including Microsoft, Palantir and AMD.

However, experts have expressed concern about the rise of AI. A group of scientists warned on Tuesday that the new technology was so powerful that “reducing the risk of extinction from AI should be a global priority, along with other societal-level risks such as pandemics and nuclear war”.