Nvidia Hits $2 Trillion Valuation as AI Frenzy Grips Wall Street

 This photograph taken in Paris on February 23, 2024 shows a US multinational Nvidia's graphic processing unit (GPU). (AFP)
This photograph taken in Paris on February 23, 2024 shows a US multinational Nvidia's graphic processing unit (GPU). (AFP)
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Nvidia Hits $2 Trillion Valuation as AI Frenzy Grips Wall Street

 This photograph taken in Paris on February 23, 2024 shows a US multinational Nvidia's graphic processing unit (GPU). (AFP)
This photograph taken in Paris on February 23, 2024 shows a US multinational Nvidia's graphic processing unit (GPU). (AFP)

Nvidia hit $2 trillion in market value for the first time on Friday, riding on an insatiable demand for its chips that made the Silicon Valley firm the pioneer of the generative artificial intelligence boom.

The milestone followed another bumper revenue forecast from the chip designer that drove up its market value by $277 billion on Thursday - Wall Street's largest one-day gain on record.

Its rapid ascent in the past year has led analysts to draw parallels to the picks and shovels providers during the gold rush of 1800s as Nvidia's chips are used by almost all generative AI players from chatGPT-maker OpenAI to Google.

That has helped the company vault from $1 trillion to $2 trillion market value in around eight months - the fastest among US companies and in less than half the time it took tech giants Apple and Microsoft.

"For AI companies today - the leaders of the sector - what's going to be binding for them is not going to be demand. It's just going to be their capacity to answer the surging demand," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Nvidia's shares were last trading up about 2%. They had risen as much as 4.9% to a record high $823.9 earlier in the session, giving the world's fourth most valuable company a market capitalization of $2.05 trillion.

Its shares have surged nearly 60% this year, after more than tripling in value in 2023. The chip designer's 2024 share surge has been crucial to the S&P 500's gains, contributing to more than a quarter of the stock index's rise this year.

Its latest market-beating forecast of a whopping 233% growth in first-quarter revenue helped global markets notch record highs on Thursday.

The breakneck growth has drawn analysts and investors from far and wide to Nvidia.

"I'm a European fund manager, but I must have had more emails about their results than I've had about any other set. There have been calls, every broker doing 10-minute debriefs, it's been mind boggling," said one investor, who declined to be named.

Despite the share surge, Nvidia's valuation has fallen due to rapid increases in analysts' estimates. It has a 12-month forward price-to-earnings ratio of about 31, down from 49 times a year ago, according to LSEG data.

"Leading cloud computing companies plan to boost their capital expenditure to satisfy demand for AI training and inference, and it appears that virtually all this spending will fall into Nvidia's pockets," said Brian Colello, a strategist at Morningstar.

"We anticipate revenue will rise by a couple of billion each quarter throughout fiscal 2025 for Nvidia as more chip supply comes online."



Nvidia Showcases AI Chips as It Shrugs off DeepSeek 

Nvidia CEO Jensen Huang gives a keynote address at CES 2025, an annual consumer electronics trade show, in Las Vegas, Nevada, US, January 6, 2025. (Reuters)
Nvidia CEO Jensen Huang gives a keynote address at CES 2025, an annual consumer electronics trade show, in Las Vegas, Nevada, US, January 6, 2025. (Reuters)
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Nvidia Showcases AI Chips as It Shrugs off DeepSeek 

Nvidia CEO Jensen Huang gives a keynote address at CES 2025, an annual consumer electronics trade show, in Las Vegas, Nevada, US, January 6, 2025. (Reuters)
Nvidia CEO Jensen Huang gives a keynote address at CES 2025, an annual consumer electronics trade show, in Las Vegas, Nevada, US, January 6, 2025. (Reuters)

Nvidia chief Jensen Huang is expected to showcase cutting-edge chips for artificial intelligence (AI) and quantum computing on Tuesday, shrugging off talk of China's DeepSeek disrupting the market.

Huang's keynote presentation at Nvidia's annual developers conference should pack the SAP Center in the Silicon Valley city of San Jose, where the Sharks NHL hockey team plays.

Industry watchers expect Huang to spotlight Nvidia's latest Blackwell line of graphics processing units (GPUs), including new updates in the works.

The AI boom propelled Nvidia stock prices to stratospheric levels until a steep sell-off early this year triggered by the sudden success of DeepSeek.

The stock, one of the most traded on Wall Street, is down more than nine percent this year despite a recent rebound from a March low.

China-based DeepSeek shook up the world of generative artificial intelligence (GenAI) with the debut of a low-cost but high-performance model that challenges the hegemony of OpenAI and other big-spending behemoths.

But several countries have questioned DeepSeek's handling of data, which the firm says is collected in "secure servers located in the People's Republic of China."

Nvidia high-end GPUs are in hot demand by tech giants building data centers to power artificial intelligence, and some say a low-cost option could weaken the Silicon Valley chip star's business.

Yurts co-founder and CEO Ben Van Roo, whose company specializes in keeping sensitive data protected while allowing access by AI models, believes DeepSeek's popularity bodes well for Nvidia.

"DeepSeek drastically accelerated the desire to consume these models," Van Roo told AFP.

"You've opened the world's appetite even more (to generative AI) and independent of the fact that it's Chinese, I think it was a good day for Nvidia."

- Blackwell Booming -

Nvidia has ramped up production of its top-of-the-line Blackwell processors for powering AI, logging billions in sales in its first quarter on the market.

"AI is advancing at light speed" and is setting the stage "for the next wave of AI to revolutionize the largest industries," Huang told financial analysts recently.

Huang believes Nvidia chips and software platforms will continue to power or train AI for robots, cars, and digital "agents," the term used for AI that can execute decisions instead of humans.

The CEO is also likely to talk up a leap to quantum computing.

After several dashed predictions, quantum computing is accelerating rapidly with actual use cases and scientific breakthroughs expected within years, not decades.

US tech giants, startups, banks, and pharmaceutical companies are pouring investments into this revolutionary technology.

GPUs like those made by Nvidia are ideal for handling multiple computing tasks simultaneously, making them well suited for quantum computing.

The US and China are racing ahead in quantum development, with Washington imposing export restrictions on the technology.

Nvidia reported that it finished last year with record high revenue of $130.5 billion, driven by demand for its chips to power artificial intelligence in data centers.

Nvidia projected revenue of $43 billion in the current fiscal quarter, topping analyst expectations.