In just a single day, Nvidia’s stock price rose 24% – crushing expectations from Wall Street. The chip maker is now worth $939.3 billion thanks to the price rise, well ahead of companies such as Tesla and Facebook, which are worth around $584.7 billion and $647.6 billion.
Why it matters: The incredible earnings stem from the quick rise in demand for AI as the tech world looks to create new versions and expedite innovation. Technology companies around the world are buying Nvidia’s graphics processing units, or GPU chips, en masse as they look to crunch large amounts of data and train their revolutionary artificial intelligence programs.
- The launch of OpenAI’s ChatGPT in November helped show the potential of the technology, serving as a launching pad for a new AI arms race. “The technology came together and helped everybody realize what an amazing product it can be and what capabilities it can have,” said Nvidia’s Chief Financial Officer Colette Kress around ChatGPT’s launch and their GPU chips.
- Greg Osuri, the founder of Akash Network, said that Nvidia is the only company that makes the chips needed for training AI models. He also said that a set of eight of the most advanced chips can cost $300,000, which reinforces the reasoning behind Nvidia’s valuation over the last six months.
- When the AI boom began in earnest earlier this year, Nvidia’s stock had already more than doubled. However, no one expected the manner in which the company propelled past expectations. Nvidia is expected to dominate in the GPU space for a long time to come.