New YorkCNN — Booming demand for its AI chips has landed Nvidia (NVDA) a prime spot in one of the most exclusive clubs on Wall Street: The chipmaker hit a market cap of $1 trillion on Tuesday.
It’s just the ninth company globally to have achieved such a feat, and only five other companies worldwide currently have the distinction: Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN) and Saudi Aramco.
Nvidia took Wall Street by surprise last week when it reported gangbusters earnings and an exceedingly strong revenue forecast for the year ahead. Fueled largely by the recent boom in AI, the report pushed share price higher and secured its position as the one of the largest publicly traded companies in the world.
Nvidia makes chips that power generative AI, a type of artificial intelligence that can create new content, such as text and images, in response to user prompts. That’s the kind of AI underlying ChatGPT, Google’s Bard, Dall-E and many of the other new AI technologies.
Last quarter, the company’s profit surged 26% to $2 billion, and sales rose 19% to $7.2 billion, each easily surpassing Wall Street analysts’ forecasts. Nvidia’s outlook for the current quarter was also significantly — about 50% — higher than analysts’ predictions.
“Nvidia gave jaw-dropping robust guidance that will be heard around the world and shows the historical demand for AI happening now in the enterprise and consumer landscape,” said Dan Ives, an analyst at Wedbush Securities. “For any investor calling this an AI bubble (crypto, metaverse, now AI bubble thesis) we would point them to this Nvidia quarter and especially guidance which cements our bullish thesis around AI and speaks to the 4th Industrial Revolution now on the doorstep with AI.”
Nvidia shares need to remain above $404.86 to retain a trillion dollar market cap. Shares of the stock are currently trading at $408.50.