Nvidia (NVDA) shares extended gains Tuesday, taking them past the $1 trillion market cap level, after the chipmaker unveiled plans to build a new AI-powered supercomputer for the Israeli government following its blowout first-quarter earnings last week.
CEO Jensen Huang also unveiled a host of new AI-related products at the Computex computer conference in Taiwan over the weekend. These included a new supercomputing platform, known as DGX GH200, which can help tech companies create their own scaled-up versions of OpenAI's ChatGPT.
The chipmaker also unveiled plans to team up with Britain's WPP plc, the world's largest advertising company, and also unveiled a system known as ACE Games to boost the level of background character designs in various new releases.
'A Reinvention of Computing': Nvidia's Huang
“Accelerated computing and AI mark a reinvention of computing,” said Huang. “We’re now at the tipping point of a new computing era with accelerated computing and AI that’s been embraced by almost every computing and cloud company in the world."
Nvidia, which added nearly $185 billion in market value last week after blasting first-quarter earnings forecasts, was marked 5.8% higher at last check to change hands just under $412 and extending the stock's year-to-date gain to around 182%.
Rival chipmakers were marked higher in premarket dealing, then turned lower in the wake of Nvidia's revenue guidance. At last check Advanced Micro Devices (AMD) shares ticked up 0.2% and Micron (MU) was off 1.3%.
AI leaders in the search markets were also on the move, with Microsoft (MSFT) and Google parent Alphabet (GOOGL) easing 0.2% and 0.4% respectively.
The Philadelphia Semiconductor Index (SOXX), the chip sector benchmark that tracks the 30 leading semiconductor companies, hit a 14-month high of 3,545.67 points last week, extending its year-to-date surge to around 40%.
Only five U.S. companies -- Meta Platforms (META), Amazon (AMZN), Apple (AAPL), Google and Microsoft -- have surpassed the $1 trillion market cap threshold, with the iPhone maker topping that milestone in early August 2018.
Last week, Nvidia said it saw current-quarter revenue of around $11 billion, more than 50% ahead of Wall Street forecasts, with a gross margin of around 70%. That likely equates to earnings in the region of $2.04 a share, nearly double Wall Street's prior $1.07 per share forecast for the quarter.
For the three months ended in April, Nvidia also blew away Wall Street forecasts with a bottom line of $1.09 a share on revenue of $7.19 billion. That result was powered by record data-center sales of $4.28 billion, a 14% increase that Nvidia said was led by growing demand for generative AI and large language models.
“The Big Tech earnings season was dominated by relentless AI detail, and dazzling earnings from Nvidia have added more fuel to the already high-octane AI boom," said Nigel Green of London-based deVere Group. "Naturally, investors don’t want to miss out, but they must take a cautious approach to the AI boom to avoid getting burned."
Green recommends focusing on big-cap names over smaller rivals, given their advantage in being able to invest cash reserves in new R&D. Investors should take a longer-term approach guided by a good fund manager that will "help select winners from losers, allowing you to make informed, balanced decisions to build your wealth."
Memorial Day Savings! Unlock trusted portfolio guidance for a fraction of the price. Subscribe now.
