The Guardian

AI boom sends shares in US chip firm Nvidia soaring

- Jasper Jolly

The value of the US tech company Nvidia has soared by a quarter after it predicted a boom in demand for its computer chips to meet the needs of artificial intelligen­ce products such as ChatGPT.

Nvidia’s share price rose by 25% in early trading on the back of the announceme­nt, and gave it a market valuation of more than $940bn (£760bn) after stock markets opened on Wall Street yesterday, up from $755bn on Wednesday evening.

The share price had already more than doubled over the course of 2023, amid huge optimism over the rapid progress of generative AI products. These require massive datacentre­s full of semiconduc­tor chips to operate. The hype was kicked off late last year after the startup OpenAI revealed ChatGPT, a chatbot capable of producing extraordin­arily humanlike answers to users’ queries – albeit with problems around accuracy.

So rapid has the developmen­t of similar technology been in recent months – including realistic pictures, audio and video – that even AI experts are unclear about the potential capabiliti­es and dangers of the technology.

Nvidia’s share price easily surpassed its previous all-time high of $333.76 from late 2021 when US markets opened yesterday. In early trading it reached $385.84 a share.

Companies across the economy are racing to show how they will incorporat­e AI into their existing businesses.

Some analysts warn that an AI tech bubble may be forming, while chip companies are also increasing­ly caught up in the geopolitic­s of the US and China amid tit-for-tat restrictio­ns on semiconduc­tor exports.

Neverthele­ss, the rush for AI has provided a huge boost to businesses such as Nvidia which provide the hardware needed to run complex models with billions of inputs.

Jensen Huang, the co-founder and chief executive of Nvidia, Huang said he expected his company to benefit from a huge shift in data centres towards more specialise­d chips made by his firm as companies raced “to apply generative AI into every product, service and business process”.

On Wednesday, Nvidia reported revenue of $7.2bn for the three months to the end of April, 10% above prediction­s from analysts. Yet it was the forecasts of huge future sales that fixated investors.

Nvidia forecast revenues of $11bn for the three months to the end of July – more than 50% higher than the $7.2bn predicted by Wall Street.

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