Nvidia Corp. is set to became the first chipmaker to achieve a $1 trillion market capitalization as its blowout revenue forecast underlined the enormous growth potential from artificial intelligence.
The stock jumped as much as 4% in pre-market trading to $404.9, giving it an indicative market valuation of $1 trillion. It’s set to be one of five US companies with such a capitalization, joining Alphabet Inc., Amazon.com Inc., Apple Inc. and Microsoft Corp. Only nine companies globally have ever achieved this level.
“The reason Nvidia is seeing so much demand and getting this growth is because it is actually providing the tech needed to service this wave of innovation and utilization,” said Zeno Mercer, senior research analyst at ROBO Global. “It is in the pole position right now.”
The milestone is the just the latest example of Wall Street’s newfound fascination for all things AI-related. Nvidia, which makes the chips needed for complex AI computing tasks, has more than doubled this year, a surge that has added more than $600 billion in market value through the end of last week.
In a two-hour presentation in Taiwan on Monday, Nvidia’s Chief Executive Officer Jensen Huang unveiled several AI-related products. The wide-ranging lineup included a new robotics design, gaming capabilities, advertising services and a networking system.
Furthermore, Huang also revealed an AI supercomputer platform called DGX GH200 that will help tech companies create successors to ChatGPT, with Microsoft, Meta and Alphabet’s Google being expected to be among the first users.
While the stock has consistently risen this year, supported by interest in AI, the latest catalyst came after it gave a revenue forecast that stunned Wall Street with the scale of the upside. The Santa Clara, California-based company said it expects to generate about $11 billion in sales during its fiscal second quarter, compared to the $7.2 billion analysts had forecast.
“In the 15+ years we have been doing this job we have never seen a guide like the one Nvidia just put up,” said Sanford C. Bernstein analyst Stacy Rasgon. The outlook was “cosmological” and “annihilated expectations,” he added.
--With assistance from Joel Leon, Farah Elbahrawy and Michael Msika.