On Tuesday, chip maker Nvidia briefly joined the ranks of companies worth more than $1 trillion.
The share price shot up more than 5%, touching just above the $1 trillion mark before retreating.
Shared had already jumped more than 25% after the company revealed significant demand due to advances in AI.
Other publicly traded US tech firms worth more than $1tn include Apple, Amazon, Alphabet and Microsoft.
Who are NVIDIA?
Founded in 1993, Nvidia was initially known for making specialised computer chips, designed to make graphics for computer games.
The firm’s founder Jensen Huang invested in added functionality for the chips long before the rise of AI – a decision that seems to have paid off.
Today Nvidia’s hardware underpins most AI applications, cornering a huge percentage of the market for machine learning.
In fact, ChatGPT was trained using Nvidia’s chips, which were clustered together in a supercomputer owned by Microsoft.
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A new AI superpower
Over the past 12 months, Nvidia’s share price has over doubled, and investors are optimistic about the company’s success as AI continues to evolve.
“We view Nvidia at the core hearts and lungs of the AI revolution,” Wedbush Securities analyst Dan Ives wrote last week, after the firm told investors it expected to bring in $11bn in sales in the three months to August – almost 50% more than analysts had predicted.
However, there are questions around whether Nvidia can keep up with demand, especially as tech rivals race to develop competitor products.
Geir Lode, head of global equities at Federated Hermes, said the magnitude of the recent leap in Nvidia’s share price was “an astonishing surprise even to techno-optimists”.
Nvidia share price
“Artificial intelligence is the next super charged growth area, and we expect this is just the beginning,” Mr Lode said. “We know growth will be there, but valuations can be hard to justify.”
Investor Cathie Wood, chief executive of Ark Invest recently tweeted that the firm’s shares were “priced ahead of the curve”. She said markets were making a mistake to think the company was “the only AI play”.
Source: BBC
