On Tuesday morning, Nvidia experienced a temporary surge in valuation to reach a staggering $1 trillion, attributed to the growing trend of tech companies, both large and small, incorporating generative artificial intelligence tools into their products. The prevalence of AI tools was evident in recent Google I/O and Microsoft Build presentations, with Nvidia’s chips being a crucial supplier for companies seeking to develop AI-based products.
As trading commenced today, Nvidia’s valuation surpassed the trillion-dollar milestone, with each share trading at slightly over $405, placing the company in an exclusive group that includes only a handful of large corporations such as Apple and Microsoft, which surpassed this significant threshold in August 2018 and August 2019, respectively. Amazon and Google are also among the elite tech stocks in this group, while Meta was once a member.
At the close of trading on Monday, Nvidia’s share price had declined to $401.11 from its peak of roughly $419, resulting in the company’s stock being valued at approximately $992 billion, thus removing it from the esteemed $1 trillion club, at least for the time being.
Nvidia’s most recent quarterly earnings report indicated a profit of over $2 billion in just three months. The company’s current surge in valuation follows a period of significant growth during the early stages of the pandemic, during which there was a shortage of GPUs, and they were in high demand for PC gaming and cryptocurrency mining. However, these markets have since declined throughout 2022.
In the autumn of last year, Nvidia’s CEO, Jensen Huang, acknowledged that the company had produced an excess of gaming GPUs, resulting in their sale at a reduced price. Nevertheless, by the time of the subsequent earnings report in February, with ChatGPT making headlines, the outlook had improved significantly. Huang expressed optimism regarding Nvidia’s data center growth potential, and the most recent report indicated a record in data center revenue.
During the weekend, Nvidia’s Computex 2023 keynote was replete with AI-related announcements. Among them was a demonstration of games utilizing the Avatar Cloud Engine (ACE) for Games, which supports natural language for both input and responses. Additionally, Nvidia unveiled a new DGX GH200 supercomputer, which incorporates its latest Grace Hopper Superchip, capable of collectively achieving an exaflop of AI performance.
According to reports by Bloomberg and Reuters, Nvidia’s shares surged by approximately 25% last week, with premarket trading on Tuesday morning indicating a gain of roughly 4%, reaching a high of $404.91.
