For Nvidia, the generative artificial intelligence (AI) boom means everything, everywhere, and all at once.
Shares of the chip designer continued their year-to-date rally on Thursday, rising 25 percent after a stellar forecast showed Wall Street is yet to price in the company’s AI potential, which has already doubled in value in 2023 .
Nvidia, whose stock hit an all-time high in premarket trading, was expected to increase its market value by about $189 billion to $945 billion (about 78,19,572 crore).
The rosy gains also sparked a rally in the chip sector and AI-focused companies, leading to a rebound in equity markets from Japan to Europe. In the US, companies like Alphabet, Microsoft and AMD were up between 2 and 8 percent.
Analysts rushed to raise their price targets on Nvidia stock. 21 Analysts took the view that all roads in AI lead to the company as it provides the chips for ChatGPT and many similar services.
“In the 15+ years that we’ve been doing this job, we’ve never seen a guide like the one that Nvidia just put out with its Q2 outlook, which was cosmological in every way and blew expectations.” said Stacy Rasgon of Bernstein.
Nvidia, the fifth-most valuable U.S. company, forecast on Wednesday that quarterly sales would be more than 50 percent ahead of Wall Street estimates and said supply of AI chips will be greater in the second half of the year to meet the surge in demand .
CEO Jensen Huang said current equipment in data centers worth US$1 trillion (about Rs82.74.230 billion) would need to be replaced with AI chips as generative AI is used in every product and service.
The results bode well for big tech companies, which have shifted their focus to AI in hopes the technology would help spur demand while their profit engines, digital advertising and cloud computing, are being squeezed by a weak economy.
“This Nvidia prediction changes the entire narrative around AI and future enterprise demand. Historic turning point potentially in the AI revolution, with Nvidia as the key barometer,” said Dan Ives of Wedbush.
© Thomson Reuters 2023