Company exceeds Wall Street’s expectations with a 265% increase in sales, citing a ‘tipping point’ for AI
Nvidia reached a $2 trillion stock market valuation on Friday, capitalizing on the AI boom. The company’s extraordinary share surge had already surpassed Amazon and Alphabet, making it the third largest in the US. Nvidia’s latest earnings report, with a 265% sales increase, fueled a new rally this week. It took over two decades for the Santa Clara-based company to reach a $1 trillion valuation, but less than nine months to reach $2 trillion.
Shares in the group began rising on Friday when trading opened in New York, briefly hitting the milestone. However, they later receded and ended the day up 0.4%, with a valuation of around $1.97 trillion.
During early trading, the benchmark S&P 500 also surpassed 5,100 for the first time before retreating. Both the S&P 500 and the Dow Jones industrial average finished the week at new record highs as Wall Street continues its upward trend.
Nvidia is a central player in the AI boom, with many tech developers relying heavily on its products. Microsoft, OpenAI, Amazon, Meta, and Google have all secured deals to purchase Nvidia’s chips in large quantities as they rush to launch new AI products and features.
This surge in demand has significantly boosted Nvidia’s business, with the company’s key profit metric—revenue from data centers—increasing by over 400% in the last quarter to $18.4 billion.
Jensen Huang, Nvidia’s founder and CEO, celebrated a “tipping point” for faster computing generative AI as the company released its latest earnings report on Wednesday.
Nvidia’s financial performance, along with the growing demand for its shares, are now viewed as indicators of overall interest in AI. Since the beginning of the year, the company’s stock has surged by over 60%.
Anticipation for its growth trajectory has been fueled by Nvidia’s upcoming release of a new chip, the B100, positioned at the top of its product line later this year. Some notable figures, such as OpenAI’s Sam Altman, are in discussions regarding plans for competing AI chip ventures.
According to Dan Ives, a technology analyst at Wedbush, Huang and Nvidia have essentially unlocked a formula and initiated a significant technological transformation that investors are trying to understand. “The AI Revolution begins with Nvidia, and in our opinion, the AI party and excitement are just beginning,” Ives said.
Ives further stated that the broader industry has not witnessed a revolution of this magnitude in decades. He described AI, along with Nvidia’s role in advancing its development, as a “transformative technological trend not seen since the advent of the internet in the mid-90s.”
