Nvidia, the renowned chipmaker, briefly reached a market capitalization of $1 trillion as trading commenced on Tuesday. This milestone placed Nvidia in the exclusive club of predominantly technology companies that have achieved such a feat. To maintain this distinction throughout the day, Nvidia’s shares needed to remain above $404.86.
The surge in Nvidia’s stock price can be attributed to its impressive quarterly earnings report, which surpassed consensus estimates on both the top and bottom lines. This remarkable performance not only boosted Nvidia but also had a positive impact on other chipmakers, with the exception of Intel. Additionally, Nvidia’s optimistic forecasts contributed to the stock’s rise, as the projected sales for the fiscal second quarter of 2024 alone were 50% higher than the consensus estimates of $7.15 billion, amounting to $11 billion.
The chip industry, as well as the technology sector as a whole, has experienced a prosperous year, partly driven by the growing excitement around artificial intelligence (AI) and the potential slowdown in Federal Reserve rate hikes. Nvidia’s success resonated with other tech giants such as Alphabet, Meta, and Microsoft, which also saw their stocks surge in last week’s trading.
Nvidia’s graphics processing units (GPUs) play a critical role in generative AI platforms like OpenAI’s ChatGPT and Google’s Bard. While GPUs were historically associated with intensive gaming, the rise of cryptocurrency mining and AI applications has revolutionized their perception. As a result, GPU manufacturers and suppliers like Nvidia, AMD, and TSMC have witnessed substantial increases in their share prices in recent months.