Nvidia nears a $1T market cap as it positions its chips as fuel for the AI race
Hype machine (learning)… Nvidia is riding the artificial-intelligence wave near a trillion-dollar valuation. The chipmaker’s stock surged 25% yesterday after it reported earnings, catapulting it to the #5 spot of highest-valued US companies (behind #4 Amazon). Nvidia’s revenue was down 13% from last year as demand for its gaming chips sagged. But sales grew 19% quarter over quarter thanks to demand for its data-center chips for cloud and AI.
What investors really liked: Nvidia expects revenue to be 50% higher this quarter than last as the need for AI chips soars.
Rising tide: Techy boats lifted on Nvidia’s news as investors piled into other chip stocks like AMD, TSMC, and ASML.
Selling shovels to an AI gold rush… and Nvidia’s set up shop in a boomtown. Nvidia’s A100 chip was already the gold standard used in the large language models that underpin AI tools (thousands of A100s were used to train OpenAI's ChatGPT). But last month a hot new bombshell entered the server: the H100 chip, which is apparently faster and stronger than its predecessor. Orders are flooding in for the supercomputing chip from companies like Dell and Google.
- Ahead of the pack: Unlike rivals Intel and AMD, Nvidia has specialized in GPUs (graphics chips), positioning it well for the latest rush.
Change your shovels based on the gold… Nvidia is known for its graphics cards for gaming consoles like Nintendo's Switch. Gaming sales made up nearly a third of its revenue last quarter, even after dropping 38% from last year. As the pandemic-fueled gaming boom fades and controllers start to gather real dust (not just Cheeto dust), Nvidia is shifting its focus to the AI gold rush to drive growth.