Nvidia is hurtling toward the billion-dollar club as the AI ​​frenzy drives chipsets up

Nvidia’s breakout sales forecast showed the Silicon Valley company would become the first chipmaker to be valued at more than $1 billion, as rising demand for artificial intelligence processors boosted semiconductor inventories on Thursday.

Shares of Nvidia jumped 23 percent in New York on Thursday morning after its sales forecast of $11 billion for the three months ending in July beat earlier Wall Street estimates by more than 50 percent.

Nvidia added about $170 billion to its market value after Wednesday’s quarterly report, more than the total value of Intel or Qualcomm and the biggest one-day gain ever for a U.S. stock, according to Bloomberg data. With a market capitalization of $927.2 billion, Nvidia is within reach of Apple, Microsoft, Alphabet, Amazon and Saudi Aramco in the elite group of over $1 billion companies.

In addition to Nvidia, chip suppliers including Taiwanese manufacturer TSMC and Dutch equipment manufacturer ASML reported increases of 3.5 percent and 5 percent, respectively.

Wednesday’s results bolstered Nvidia’s claim that it is the only company whose technology can meet the industry’s need to create generative artificial intelligence systems capable of creating human 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 like Nvidia’s most powerful H100 processor have become highly sought after, not only by Big Tech companies, but also by a new wave of AI startups like OpenAI and Anthropic, which have raised billions of dollars in venture funding in recent years. in months.

“We’re obviously seeing a huge spike in AI demand, and Nvidia is at the forefront of that,” said Geoff Blaber, CEO of CCS Insight, a technology consultancy, calling its chips and related software tools “picks and shovels.” ” is the “generational shift in AI”. “They are undoubtedly in the pole position because they provide a comprehensive tool chain that no other company can currently do.”

AMD, which like Nvidia makes specialized chips best suited to train massive data sets for artificial intelligence, jumped 8 percent in early trade, while Micron, the US memory chip supplier, faces new trade restrictions in China amid rising tensions with the US in the middle of it. It rose by 4 percent. Shares of Microsoft and Google also rose.

Several U.S. and Japanese equipment suppliers to chip makers also rose. Tokyo Electron rose 3 percent, while Tokyo-based Advantest, which makes semiconductor test kits, rose 16 percent. In the US, Applied Materials and Lam Research were slightly higher in premarket trading.

But Intel, which investors say has lagged behind in the AI ​​transition, fell 5 percent in early trading as investors bet that artificial intelligence will accelerate a fundamental shift in data center technology at cloud providers such as Microsoft, Amazon and the Google. internet groups including Meta.

Even before Thursday’s move, Nvidia shares were set to double in 2023 as concerns last year about a slowdown in cloud spending after Big Tech surged in the pandemic era gave way to frenzied enthusiasm for a new generation of artificial intelligence, led by chatbots such as such as OpenAI. The Bard of ChatGPT and Google.

Even though Amazon, Google, Meta and Microsoft are all investing in their own custom AI chips, analysts say few companies can match Nvidia’s technological advantage.

In recent years, Nvidia shares have risen and fallen amid previous waves of hype around cryptocurrencies and previous generations of artificial intelligence, such as autonomous driving, that failed to live up to their original promise.

But Nvidia CEO Jensen Huang said on a call with analysts on Wednesday that with 15 years of investment and expanding production capacity, Nvidia was in the right place at the right time as ChatGPT kicked off an even bigger investment cycle by the world’s wealthiest companies. .

“When generative AI came out, it launched a killer application on this computing platform that has been in the pipeline for some time,” he added.

“As generative artificial intelligence becomes the primary mission of the world’s most information-producing data centers, it is now abundantly clear that . . . data center budgets are shifting very dramatically towards accelerated computing, and you’re seeing it now.”