Nvidia hits $1 trillion market cap as chipmaker rides AI wave

WORLD  30 May 2023 - 19:21

Nvidia has become the first chipmaker to hit a $1tn valuation, leading a surge of enthusiasm across Wall Street for companies seen to benefit from the latest developments in artificial intelligence.

Its shares rose more than 4 per cent to hit $406.1 in early trading in New York on May 30, after its chief executive Jensen Huang launched a new supercomputer and struck new AI alliances with companies including WPP and SoftBank on Monday.

Those moves built fresh momentum after Nvidia impressed investors and analysts last week, projecting its sales would rise to $11bn in the three months ending in July, exceeding Wall Street’s previous forecasts by more than 50 per cent, Financial Times.

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

High-powered chips such as Nvidia’s H100 have become essential to building generative AI systems that are capable of creating text and images that closely resemble what humans can produce. Generative AI promises to unleash new kinds of productivity tools but also threatens to shake up jobs in industries such as media and education.

Nvidia’s $1tn market capitalisation 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 dropped below the threshold just a few months later. Amazon became the first public company to lose $1tn in market capitalisation in November amid a wider sell-off in tech stocks last year.

Shares in Nvidia lost half their value during 2022 as investors fretted about a slowdown in corporate spending in data centres and pandemic hangovers in the gaming and cryptocurrency markets. But Tuesday’s move follows a 25 per cent jump in Nvidia’s stock last week, taking its gain so far in 2023 to more than 180 per cent.

Caliber.Az