The US chip manufacturer Nvidia has joined the exclusive club of one trillion companies. Shares topped Friday’s record high today – thanks to the euphoria surrounding artificial intelligence.
Thanks to the growing demand for chips due to the boom in artificial intelligence (AI), Nvidia’s market value has broken the sound barrier of one trillion dollars (around 933 billion euros). As the first chip manufacturer, the company slips into an exclusive club of currently six companies. So far, only nine companies have managed to do this.
When Wall Street opened, Nvidia shares climbed almost seven percent to a new record high of $415.50. As a result, the market capitalization grew to almost $1.026 trillion. The other US companies with comparable or higher stock market values are the online retailer Amazon, the computer company Apple, the software company Microsoft and the Google mother Alphabet. From abroad, the Saudi Arabian oil producer Saudi Aramco also plays in this league.
AI boom creates high demand
The soaring of the Nvidia papers continues after the long weekend. On Thursday, stronger-than-expected numbers and business targets sent stocks surging 25 percent. The specialist for graphics card, server and AI chips expects quarterly sales of 50 percent above expectations. Numerous analysts had subsequently raised their forecasts. Another increase of a good two percent followed on Friday.
The announcement of new investments caused even more optimism. According to Nvidia, Israel is building one of the world’s fastest supercomputers in order to be able to better satisfy the boom in AI applications such as ChatGPT. “Israel-1” will achieve a computing power of up to eight exaflops. An exaflop equals a trillion – a one followed by 18 zeros – calculations per second. “Generative AI is everywhere these days,” said Nvidia manager Gilad Shainer in an interview with “Reuters”.
Generative AI like ChatGPT requires a lot of computing power to create text, images or videos using just a few keywords. Graphics chips are particularly well suited for this because they are designed to carry out numerous calculations in parallel. “If the AI trend is sustainable, then the immediate demand will be for chips and computing power, and that’s where Nvidia is the flagship at the moment,” said Thomas Hayes, chairman of private equity firm Great Hill Capital.
Experts warn against high demands and profit taking
Nvidia was founded 30 years ago by US Taiwanese Jen-Hsun “Jensen” Huang. Year-to-date, stocks are now up nearly 180 percent, more than four times the Philadelphia Semiconductor Index. It was only in the first half of 2001 that Nvidia papers went up even more steeply.
“With Nvidia’s valuation above its long-term average, there is increasing pressure to deliver sustained high growth,” warned analyst Susannah Streeter of brokerage house Hargreaves Landsdown. Therefore, price turbulence must be expected. Even Thomas Hayes, manager at asset manager Great Hill, did not rule out possible profit-taking. Investors are not yet sure if the current AI trend is real.