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Nvidia’s market price now is nearly at the same level as Alphabet’s. Until now, none of the existing US-based chip-making companies has achieved the $1 trillion market capitalization mark.
Nvidia GeForce RTX video card and its logo visible in the background – illustrative photo. Image credit: Christian Wiediger via Unsplash, free license
Nvidia Corp is poised to reach a market capitalization of over $1 trillion, making it the first microelectronics producer in the United States to enter the ranks of this “trillion-dollar club” which spans a very limited number of companies.
In premarket trading, the company’s shares rose by 3.5% to $402.91.
If we take other industries into account, Nvidia is not the only company to achieve such a valuation. Previously, Meta (formerly Facebook), with a valuation of around $670 billion, reached the trillion-dollar market capitalization milestone in 2021. Other American companies in this elite group include Apple, Alphabet, Microsoft, and Amazon.
Nvidia graphic cards – illustrative photo. Image credit: LauraTara via Pixabay, free license
Nvidia’s recent revenue forecast, which exceeded analysts’ expectations by more than 50%, highlighted the prominence of artificial intelligence (AI). Electronic chips adapted for AI applications have revolutionized the field of artificial intelligence, enabling advanced computational capabilities and unprecedented performance.
These specialized chips, often referred to as AI chips or AI accelerators, are designed to efficiently handle the complex calculations and data processing requirements of AI algorithms. They are tailored to support the unique demands of neural networks, which are fundamental to many AI tasks such as image recognition, natural language processing, and autonomous driving.
This revelation astonished investors and led Wall Street analysts to describe it as “unfathomable” and “cosmological.” Consequently, analysts significantly raised their price targets, with the highest valuation placing the company at approximately $1.6 trillion, which is in fact on the same level as Alphabet, the parent company of Google.
Following Nvidia’s impressive performance, its shares surged by around 25% last week, triggering a subsequent hike in stocks from companies specializing in artificial intelligence products and applications. The same spike provided a positive and significant boost to other chipmakers.
In recent years, several companies, including Nvidia, Intel, Google, and specialized startups, have developed and commercialized AI chips tailored for different AI applications. These chips come in various form factors, ranging from standalone chips to integrated circuits and even entire AI-specific hardware platforms.
The deployment of such products in data centers, cloud computing infrastructure, edge devices, and autonomous systems has propelled advancements in AI technology and enabled the widespread adoption of AI. Analysts expect this trend would continue into the future, across various industries, including healthcare, finance, transportation, and more.
Written by Alius Noreika
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