Nvidia shares soared 27.6% in extended trading yesterday, catapulting the company towards a $1 trillion market cap.
The shares rose dramatically following Nvidia’s first-quarter report, which highlighted a 19% quarter-on-quarter increase in revenue, significantly surpassing expectations
Nvidia is a leading manufacturer of cutting-edge chips essential for the training of AI services, a sector that’s seen a tsunami of investment fueled by the buzz around OpenAI's ChatGPT and similar AI-powered tools.
“Two simultaneous transitions–accelerated computing and generative AI,” said the firm’s founder and CEO Jensen Huang.
“A trillion dollars of installed global data center infrastructure will transition from general-purpose to accelerated computing as companies race to apply generative AI into every product, service, and business process,” he said in the firm’s latest quarterly report.
Huang also revealed that the firm had commenced full-scale production of its latest AI chips as early as August last year.
This foresight gave them a safety net when the popularity of chatbot applications surged unexpectedly. "In January, the new demand was incredibly steep," said Huang, adding that the firm “had to place additional orders, and we procured substantially more supply for the second half" of 2023.
AI around the market
The strong performance not only lifted Nvidia's own stocks but also fueled the growth of shares in other AI-related firms.
These include competitor chip manufacturer Advanced Micro Devices, generative AI advocates Microsoft and Google, AI software creator C3.ai, and Palantir Technologies, among others.
The esteemed “trillion-dollar club” consists of only five members: Apple, Saudi Aramco, Microsoft, Alphabet, and Amazon. Both Tesla and Meta briefly enjoyed membership in 2021, until falling off early last year.
Should these gains hold at market open today, Nvidia stands to expand its existing $755 billion market capitalization by an additional $219 billion in a single day.
This would exceed Amazon’s record-setting $191.2 billion increase on February 4, 2022.