U.S. chipmaker Nvidia’s forecast for surging revenue sent its stock up 23% at the market opening on Thursday.
- The California-based chipmaker says it expects sales to be $11 billion for the quarter.
- The news surprised Wall Street analysts who were anticipating $7.2 billion in revenue.
- With a stock increase of more than 25%, the company would achieve a market cap of $1 trillion.
why it’s news
Nvidia has been greatly helped by the advent of artificial intelligence (AI), as the tech world has moved many resources into the development of AI products. It’s the biggest maker of the advanced chips required to drive AI services.
Other stocks jumped as well. Advanced Micro Devices Inc. rose 10%. The combined increase in value by chipmaker SK Hynix Inc., ASML, BE Semiconductor, VAT Group AG, and Soitec was $260 billion of value, Bloomberg reports.
“We believe this is just the beginning of a paradigm-altering generative-AI wave,” Barclays analyst Blayne Curtis writes in a report. “So far, it seems that Nvidia is the one capturing nearly all the economics.”
ChatGPT’s debut in November launched an international scramble to develop services that generate content with user prompts.
It’s not clear who will become the winner in AI services, but Nvidia and other makers will be providing the chips for many of them, likely propelling its profits and stock price even higher.