Chipmaker Nvidia’s shares rose more than 24 percent on Thursday after the company posted a stunning quarterly revenue outlook on demand for processors running artificial intelligence systems.
“We’re seeing incredible orders to transform the world’s data centers,” Nvidia CEO Jensen Huang told analysts in a conference call on Wednesday.
Nvidia’s chips are used to power AI systems; Demand for the chips skyrocketed during the cryptocurrency boom, whose systems also rely on their computing power. At the close on Wednesday, Nvidia’s market cap reached $755 billion, the fifth-highest public valuation in the United States. On Thursday, the company approached the trillion-dollar club at $939 billion.
The AI rally has also boosted other chip stocks, including AMD, ASML, and Taiwan Semiconductor Manufacturing Company. Since the launch of the ChatGPT chatbot in November, enthusiasm for AI has grown, making companies at the forefront of technology, such as Microsoft, Google and Nvidia, popular choices with investors.
The surge in Nvidia stock has also propelled the entire market higher, with Thursday’s surge being enough to push the S&P 500 stock index nearly 1 percent higher.
Nvidia’s stock price has more than doubled in 2023 amid industry concerns over a burgeoning microchip war between Washington and Beijing.
However, analysts are divided on how long the rally will last. Bank of America’s Michael Hartnett called the rise the start of a “baby bubble”. On the other hand, researchers at Goldman Sachs said AI-based tools could help boost the global economy by $7 trillion.
Demand for Nvidia chips is rising amid calls for greater oversight of AI technology. After meeting with senior European Union officials on Wednesday, Sundar Pichai, Alphabet’s chief executive officer, pledged that Google would work with others to develop AI services responsibly.
And starting in July, New York will require companies that use AI for staffing to inform their candidates under a new law closely watched by labor representatives.
Joe Rennison contributed reporting.