Nvidia riding AI trend to propel towards $1tn valuation

Wall Street sees third-biggest one-day gain in market capitalisation as traders try to hop on artificial intelligence craze

The world's most valuable chip company's new market valuation at $963.3 billion may soon rank it among the tech elite. Reuters

Shares of Nvidia jumped 27 per cent by Friday, approaching a $1 trillion market value, after the US chip designer projected quarterly revenue more than 50 per cent above estimates, in a sign that Wall Street has grossly underestimated its role in powering the artificial intelligence revolution.

The world's most valuable chip company's new market valuation at $963.3 billion may soon rank it among the tech elite, including Apple, Microsoft, Amazon and Alphabet.

“I’d be reluctant to say it has won the race, but it is winning right now,” Zeno Mercer, senior research analyst at ROBO Global, told Bloomberg News.

Following an AI-fuelled sales forecast this week that blew Wall Street targets out of the water, Nvidia’s value surged by $184 billion on Thursday.

That was the third-biggest one-day gain in market capitalisation ever recorded in the US.

Nvidia was co-founded in 1993 by Jensen Huang, who still runs the company, and it has pushed its technology into new markets, such as data centre servers and AI processing – a move that is proving prescient today.

The chipmaker has won orders to equip giant computing factories by successfully arguing that graphics chips can handle AI workloads better than more standard processors.

The company’s sales in the three months ending in July will be about $11 billion, Nvidia said late on Wednesday, shattering an average analyst estimate of $7.18 billion.

“We’re seeing incredible orders to retool the world’s data centres,” Mr Huang told analysts on a conference call.

A trillion dollars of data centre infrastructure will be upgraded to handle so-called accelerated computing, he said, letting them run generative AI tools such as ChatGPT.

“The budget of a data centre will shift very strongly to accelerated computing,” he added.

Shares in the company rose 2.54 per cent to $389.46 by market close on Friday.

Agencies contributed to this report