Nvidia, the renowned technology company, witnessed a significant surge of 26% in its stock value following the announcement of its first-quarter financial results. The impressive performance has positioned Nvidia as only the fifth publicly traded U.S. company to reach a staggering valuation of almost $1 trillion, joining the ranks of tech giants such as Apple, Microsoft, Alphabet, and Amazon. This remarkable achievement can be attributed to the soaring demand for high-powered AI chips in the era of generative AI.
Nvidia’s market valuation now stands at $950 billion, a significant jump of nearly $200 billion from Wednesday’s closing figure. As large language models like GPT have grown more extensive and powerful, the demand for GPUs has surged exponentially, fueling Nvidia’s growth. Notably, OpenAI reportedly employed 10,000 Nvidia GPUs for training ChatGPT, while Elon Musk is rumored to have acquired thousands of GPUs for his new AI venture, X.ai.
Generative AI has been a pivotal turning point for Nvidia’s fortunes. Yesterday, the company projected second-quarter revenue that surpasses Wall Street estimates by more than 50%. Speaking to CNBC, CEO Jensen Huang attributed this success to “generative AI,” explaining that “we know that CPU scaling has slowed, we know that accelerated computing is the path forward, and then the killer app showed up.”
While chip competitors like AMD and Google pose a potential threat, Nvidia’s platform strategy and software-centric approach make it a formidable force. Furthermore, geopolitical factors loom ominously, with recent chip export controls limiting the sale of state-of-the-art Nvidia GPUs to China. Nevertheless, experts contend that Nvidia’s robust ecosystem, encompassing chips, hardware, software, and development systems optimized for their products, remains exceptionally difficult to surpass.