Nvidia Predicts AI Boom, Gains $200bn
Nvidia's worth increased by 25% because of its projection of increased requests for computer chips used in AI products like ChatGPT.
After the announcement, Nvidia's share price went up by 24% in after-hours trading. This means their market valuation will be over $900bn when the stock markets open on Thursday. On Wednesday evening, their market valuation was only $755bn.
In 2023, the share price increased a lot because of the good progress in generative AI products. These products need big data centres with lots of chips to work well.
Last year, OpenAI revealed ChatGPT, a chatbot that got people really excited. It can give answers that sound human, but it's not always accurate.
New technology, like realistic pictures and audio and video, has been developing quickly. AI experts are unsure of what the technology could do and what dangers it might pose.
Many companies are trying to add AI to their businesses. Some experts say that there could be too much focus on AI. Chip companies are also dealing with issues related to the political relationship between the US and China. These issues are affecting the export of semiconductors.
Nivadia had trouble in 2022 when demand for its graphics chips slowed down. It couldn't buy Arm, a chip designer from the UK, because regulators stopped the deal. But its share price will likely beat its old record from late 2021 when US markets begin on Thursday.
Jensen Huang, the co-founder and CEO of Nvidia, thinks trading restrictions could hurt the US a lot. The Biden administration stopped China from buying certain computer chips worldwide. They did this using US-made tools last October. Beijing answered on Sunday by telling big infrastructure operators not to buy from the US chipmaker Micron Technology.
The demand for AI has helped businesses like Nvidia grow. Nvidia makes hardware for complex models with billions of inputs.
The company made $7.2bn revenue in three months, more than the analysts thought. Investors were most interested in the predictions for big sales in the future. Nvidia expects $11bn revenue for the next three months. This is over 50% higher than what Wall Street predicted.
Matt Bryson, an analyst at Wedbush Securities, thinks Nvidia exceeded expectations. He says Nvidia's guide was higher than expected. He thinks this is surprising for such a big semiconductor/hardware company. He's covered technology stocks for 20 years and hasn't seen anything like this.
Mark Lipacis from Jefferies predicts that Nvidia's revenue from data centres will exceed the sales of CPUs made by Intel and AMD. Intel and AMD are prominent chipmakers.
Huang said his company will profit from the shift towards specialized chips in data centers. This will happen as companies try to implement generative AI in everything they do.
Nvidia will increase its supply to meet the rising demand for data centre products.
