Nvidia Breaks $3 Trillion Market Cap

AI boom

June 6, 2024, 07:57 AM | Source: dpa / Editing: Diana Künstler

Nvidia CEO Jensen Huang with Nvidia-controlled robots

Chips from the American manufacturer Nvidia play a key role in the artificial intelligence business. This also increases the stock price, which has now reached a milestone. A price increase of more than five percent to $1,224.40 was the deciding factor on Wednesday.

The AI ​​boom has pushed the market value of US chip company Nvidia over the three trillion dollar mark. A price increase of more than five percent to $1,224.40 was the deciding factor on Wednesday. In after-hours trading, the shares rose by almost one percent. With the price increase, Nvidia narrowly overtook Apple and is now second in market value after Microsoft. The software giant has also gained popularity among investors thanks to its activities in the field of artificial intelligence. They are betting that Microsoft will use the technology ChatGPT-Inventor OpenAI, for example, could be integrated into everyday office life. However, Apple is also expected to make AI announcements at its internal developer conference WWDC next week. According to media reports, this could include a collaboration with OpenAI.

Nvidia benefits from all this: the company’s chips play a key role, especially in training artificial intelligence software in data centers. Nvidia sells thousands of chip systems to Microsoft, Google and the Facebook group Meta, among others.

This is sending Nvidia’s bottom line—and, with it, its stock price—skyrocketing. In the most recent quarter alone, revenue jumped from $7.2 billion a year earlier to $26 billion—a 262 percent increase. And demand remains high: Nvidia’s more powerful new chip systems are expected to face bottlenecks well into the year ahead. At the start of the AI ​​boom in early 2023, the company’s stock was still trading at around $150. This year alone, it’s soared from around $500 to more than $1,200.

Chips as a key technology for AI applications

Nvidia CEO Jensen Huang
Nvidia CEO Jensen Huang unveiling the GB200 Grace Blackwell superchip at Computex 2024

Nvidia technology was originally developed for graphics cards. But then it turned out that they are also ideal for computing in artificial intelligence applications. Nvidia’s chips have thus become a key technology for the future of AI – and the group also benefits from business with associated software and services.

Nvidia technology is now not only used for training, but also for operating AI applications, emphasizes CEO Jensen Huang. There is possibly an even more stable company. Although training requires enormous computing power, this is only needed once per AI model. Huang also assumes that AI will generate all kinds of content in the future that is now retrieved from databases.

Nvidia is also active in the business of so-called digital twins, which allow companies to optimize processes in their factories using virtual copies. The group also sells computers for automated and self-driving cars. Rivals such as Intel and AMD are trying to capitalize on the AI ​​boom, but have so far failed to challenge Nvidia’s leading position.

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