Nvidia Now a $2 Trillion Company, Fueled by AI Boom

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Nvidia achieved a remarkable milestone by reaching a market value of $2 trillion on Friday, driven by an unprecedented demand for its chips and its pivotal role in the generative artificial intelligence (AI) surge.

An Nvidia RTX 2060 video card.

An Nvidia RTX 2060 video card. Image credit: Christian Wiediger via Unsplash, free license

This significant achievement came on the heels of an impressive revenue forecast from the chip designer, which propelled its market value by an astounding $277 billion on Thursday – marking the largest one-day gain on record for Wall Street.

In the past year, Nvidia’s rapid ascent has prompted analysts to draw parallels with providers of picks and shovels during the 1800s gold rush. The analogy underscores Nvidia’s pivotal role, as its chips are integral to almost all major generative AI players, ranging from OpenAI, the creator of chatGPT, to tech giant Google.

The company’s remarkable journey from a $1 trillion to a $2 trillion market value occurred in just around nine months, making it the fastest ascent among U.S. companies. This accomplishment was achieved in less than half the time it took other tech giants such as Apple and Microsoft to reach the $2 trillion mark.

Nvidia’s shares surged over 4%, reaching a record high of $818 on Friday, solidifying its position as the third most valuable U.S. company. With a nearly 60% surge this year, following a remarkable tripling in value in 2023, Nvidia has maintained its momentum.

Nvidia’s recent market-beating forecast, projecting a remarkable 233% growth in first-quarter revenue, played a significant role in propelling global markets to record highs on Thursday.

Despite the substantial surge in shares, Nvidia’s valuation has seen a relative decline, attributed to the swift escalation in analysts’ estimates. Based on LSEG data, its 12-month forward price-to-earnings ratio stands at about 31, a decrease from 49 times a year ago.

Some experts highlight the anticipation among leading cloud computing companies to enhance capital expenditures to meet the growing demand for artificial intelligence training and inference. Nvidia stands to benefit significantly from this trend, projecting a consistent rise in revenue by a couple of billion each quarter throughout fiscal 2025 as more chip supply comes online.

Written by Vytautas Valinskas

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