Nvidia rose in price to a record, approaching the “trillionaires”

The market capitalization of graphics accelerator company Nvidia increased by $198 in a day – that is more than rivals Intel or AMD are worth, analysts noted.

The explosive rise in Nvidia’s share price came after the company’s quarterly report a day earlier, which later settled up 24% – this was the result not only of financial performance that beat analysts’ expectations, but also of optimistic forecasts for the future brought about by the boom in artificial intelligence technologies.

Nvidia is on the threshold of an elite club of companies with a market capitalization of more than $1 trillion. Its shares have gained more than 160% this year alone, and on Thursday its market capitalization increased by $183.8 billion, the third largest daily increase in the capitalization of a US company in history.

The record was set by Amazon, which increased in value by $191.3 billion on February 4, 2022, followed by Apple with an increase of $190.9 billion on November 10, 2022. After the jump, Nvidia’s capitalization exceeded $938 billion , approaching the “trillionaires” Apple, Microsoft, Amazon and Alphabet.

A curious fact is that in one day Nvidia added more value to its capitalization than the price of competitors such as Intel and AMD. Intel’s valuation stands at $192 billion, while AMD has a market capitalization of around $113 billion.

Current CEO Jensen Huang founded Nvidia in April 1993 when he and two colleagues discussed how to improve computer graphics. In late 2006, Nvidia revolutionized the development of software that harnesses the power of GPUs for non-graphics purposes.

It soon became clear that Nvidia’s chips were well-suited to the computations required for AI systems—they excelled at multitasking, while central processing units (CPUs) were less efficient at it.

Nvidia GPUs have also shown high performance in cryptocurrency mining, which helped the company overtake Intel in 2020 by market capitalization. With the onset of the “crypto winter”, Nvidia shares started to decline, but the boom in AI technology took them to new heights.

Analysts believe that AI promises more significant and long-term prospects for Nvidia than cryptocurrencies: the company has no competitors that can match the range and quality of its chips and software for the resource-intensive calculations necessary for generative AI to work – only ChatGPT requires 10 thousands of Nvidia accelerators.

Amazon, Microsoft and Google are actively competing in the AI ​​industry – Jensen Huang has described what’s happening as the “iPhone moment”, referring to the explosive growth in the number of smartphones since the announcement of Apple’s debut phone in 2007.

AI developers are modernizing data centers using the strengths of Nvidia’s accelerators and software – the company is getting “incredible orders”, its head admitted. The demand for Nvidia chips is so high that the entire supply chain can barely keep up with it, so for the second half of the year the company will significantly increase its supply volumes.

It should be borne in mind that Nvidia does not have its own production facilities – from the very beginning the company relies on contractors, among which is now the world leader in the industry TSMC.

All these processes can create serious problems for Intel, the main supplier of data center chips that form the basis of corporate networks and the entire Internet. Amid Nvidia’s rally, Intel shares fell 5%, even as the company is making significant efforts to meet demand for AI components.

Finally, Nvidia found itself an unwitting participant in the trade war between the US and China – it released special versions of its accelerators for Chinese customers to avoid violating sanctions imposed by Washington.