Nvidia hits $3 trillion milestone, surpasses Apple with AI chip boom
On Wednesday, Nvidia surpassed a $3 trillion market valuation for the first time in history. This places it among the elite companies that have reached this valuation milestone. The graphics chip manufacturer owes its rapid growth to the enormous popularity of artificial intelligence.
1:07 PM EDT, June 6, 2024
During Wednesday's session on the American stock market, shares of Nvidia increased by 5%, closing at $1,224.40. This gave the company a market capitalization exceeding $3 trillion, the highest in its 31-year history.
Nvidia surpassed Apple in this regard, becoming the second most valuable public company in the US after Microsoft.
Nvidia at the top: Strong demand for AI chips drives results
This is another milestone in Nvidia's spectacular stock price rise, which has increased by over 3,224% in the past five years. For comparison, Apple was the first American company to reach a valuation of $3 trillion in January 2022, and Microsoft did so in January 2024. Nvidia took about three months to jump from $2 trillion to $3 trillion.
The primary driver of Nvidia's stock boom is the massive demand from the tech industry for its high-performance graphic processors (GPUs). These are essential for creating and using large artificial intelligence models, such as the one powering ChatGPT from OpenAI, reports CNBC.
Technology giants, including Google, Microsoft, Meta, Amazon, and OpenAI, are purchasing Nvidia GPUs for billions of dollars. This translates into excellent financial results—in May, the company reported revenues of $26 billion in the first quarter, more than triple compared to the previous year. Nvidia also beat Wall Street forecasts regarding sales and profits.
Key role in the AI era
Nvidia's astronomical market valuation reflects its crucial importance to the rapidly developing AI industry. The demand for immense computational power to train language and generative models, such as the famous ChatGPT, is increasing enormously. Nvidia has the most advanced technology to handle these tasks, making it the primary beneficiary of the AI boom.
The scale and pace of demand growth for AI solutions are unprecedented. Nvidia has found itself at the center of this revolution thanks to years of investment in developing powerful GPU processors and software. The company provides hardware, platforms, and development tools that facilitate the implementation of artificial intelligence models. Everything indicates that Nvidia's role in the AI era will only grow, along with the company's valuation and importance.
