Shares of chip maker Nvidia soared more than 24% on Thursday after the company posted an impressive quarterly revenue outlook, fueled by demand for processors that run artificial intelligence systems.
“We have an incredible order to refurbish our data centers around the world,” Nvidia CEO Jensen Huang told analysts on a conference call Wednesday.
Nvidia chips are used to power AI systems. Demand for chips surged during the cryptocurrency boom, but the system also relies on its processing power. At the close of trading on Wednesday, Nvidia had a market cap of $755 billion, making it the fifth-highest public valuation in the United States. On Thursday, the company came close to the $1 trillion club at $939 billion.
Other chip stocks, such as AMD, ASML and Taiwan Semiconductor Manufacturing Company, also rose on the rise of AI. Since the introduction of the ChatGPT chatbot in November, the buzz around AI has intensified, with tech frontiers such as Microsoft, Google and Nvidia becoming hot stocks among investors.
The rally in Nvidia shares has also lifted the broader market, with Thursday’s rally enough to push the S&P 500 index up nearly 1%.
Nvidia’s stock has more than doubled in 2023, even as fears of a microchip war erupting between the US and China hang in the sector.
But analysts disagree about how long the rally will last. Bank of America’s Michael Hartnett called the rise the beginning of a “baby bubble.” Meanwhile, researchers at Goldman Sachs said tools built on AI could help boost the global economy by $7 trillion.
Demand for Nvidia’s chips is on the rise amid calls for greater scrutiny of AI technology. Alphabet CEO Sundar Pichai on Wednesday pledged that Google will work with others to develop AI services responsibly after meeting with European Union officials.
And starting in July, New York will require companies that use AI to recruit candidates to provide information to candidates under a new law that has drawn the attention of labor advocates.
Joe Rennison contributed to the report.
