In a groundbreaking achievement, Nvidia Corp has soared past the $1 trillion mark in market capitalization, making it the first-ever chipmaker to enter the elite trillion-dollar club. The gaming and AI chip company experienced a 4.2% surge in early trading on Tuesday, propelling its valuation to an impressive $1 trillion. Taiwan Semiconductor Manufacturing Co Ltd (TSMC) currently holds the title of the second-largest chipmaker globally, with a valuation of approximately $535 billion. In response to Nvidia’s extraordinary performance, Wall Street analysts have expressed their awe, describing the company’s forecast as “unfathomable” and “cosmological.” Consequently, these analysts have significantly raised their price targets, with the highest valuation reaching around $1.6 trillion, putting Nvidia on par with Google-parent Alphabet.
While Nvidia’s remarkable achievement has garnered substantial attention and excitement, some experts caution that the company will face considerable pressure to consistently deliver high growth due to its lofty valuation. Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted that the company’s share price may experience volatility in the future. Nvidia’s shares witnessed a remarkable 25% increase last week, triggering a rally in AI-related stocks and bolstering other chipmakers. This surge in performance allowed the Philadelphia SE Semiconductor index to close at its highest point in over a year by the end of the week.
The success of OpenAI’s ChatGPT, an AI language model similar to the one you are currently interacting with, has generated considerable interest among tech giants such as Alphabet and Microsoft. Generative AI, capable of engaging in human-like conversation and crafting various forms of content, including jokes and poetry, has gained significant traction. Nvidia’s recent revenue forecast, surpassing analyst expectations by more than 50%, further catapulted AI into the limelight. Thomas Hayes, chairman at Great Hill Capital, referred to Nvidia as the current “poster child” for AI, suggesting that the market is now grappling with the realization of whether the AI trend is genuinely transformative. As Nvidia continues to thrive and set new records, it cements its position as a pivotal player in the AI industry.