Nvidia’s historic high shows what artificial intelligence is capable of

Aditya Soni

(Reuters) – Nvidia soared 24% on Thursday to hit a $1 trillion market value after its strong forecast that Wall Street has yet to show the game-changing potential of AI spending.

The boom has doubled shares this year and will boost the chip designer’s value by about $190 billion to nearly $945 billion. That puts it one step away from the largest single-day revaluation by a U.S. company, which hit $190.90 on Nov. 10, the current record held by Apple.

Nvidia’s good results fueled a rebound in the chip industry and tech-focused companies. Artificial intelligence, raising stock markets from Japan to Europe. In the US, companies such as Alphabet, Microsoft and AMD rose between 2% and 11%.

The evolution of Nvidia stock in 2023. Illustration: Yahoo.

Amazed by some „cosmological” predictions

Analysts quickly raised price targets for Nvidia shares, to 27, saying all AI roads lead to the company because it supplies the chips used for ChatGPT and many other services.

The average price target has doubled this year. With a higher outlook, Rosenblatt Securities and HSBC said the $600 price target on Nvidia would value it at $1.48 trillion, more than Amazon.com Inc, the fourth most valuable U.S. company.

“We have been doing this work for over 15 years. We’ve never seen a guide quite like the one provided by Nvidia „With the outlook for the second quarter, it clearly killed the cosmology and expectations,” said Bernstein’s Stacey Rascon.

Nvidia, the fifth most valuable U.S. company, on Wednesday forecast quarterly revenue 50% higher than Wall Street’s average estimate and said it would make more AI chips available in the second half to cope with a surge in demand.

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Its chief executive, Jensen Huang, says $1 trillion worth of existing data center equipment needs to be replaced with AI chips as generative AI applies to all products and services.

The results bode well for big tech companies targeting AI, their profit engines, digital advertising and cloud computing, in hopes the technology will help attract demand at a time when the economy is under pressure from a weak economy.

„This prediction from Nvidia changes the entire narrative around AI and the need for it in the enterprise going forward. At what could be a historic tipping point in the AI ​​revolution, Nvidia could be a key barometer,” he said. Dan Ives of Wedbush.

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(Reporting by Aditya Soni in Bengaluru; Editing in Spanish by Manuel Farias)

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