Nvidia Joins the Ranks of Trillion Dollar Companies Thanks to AI

Nvidia, one of the world's leading chipmakers, has attracted the attention of investors with the ongoing artificial intelligence fury. Thanks to this interest, the company has also managed to write its name among American companies with a trillion-dollar value. Thanks to the rapid advances in the field of creative artificial intelligence, giant technology companies continue to work in this field.

Nvidia's share values have tripled in the last eight months. Creative AI is a technology that can speak almost identically to humans and produce all kinds of content, from jokes to poems, and is believed to be a game changer. Nvidia's valuation has outpaced its competitors with new investments. Some analysts believe that the ongoing artificial intelligence work still does not fully reflect the value of the company's shares. This makes investors turn to Nvidia.

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Nvidia Continues to Rise Rapidly in the Artificial Intelligence Market

As of Tuesday, Nvidia's shares were up 5.7%. The increased shares made the company worth more than $ 1 trillion. Other US companies worth more than $1 trillion are Apple Inc (AAPL.O), Alphabet Inc (GOOG.O), Microsoft Corp (MSFT.O) and Amazon.com Inc (AMZN.O). Angelo Zino, an analyst at CFRA Research, sees Nvidia as "the most important company rapidly moving into an era of greater artificial capabilities."

The company received its latest investment last week. This investment enabled the company to exceed forecasted revenue by more than 50%. Some analysts have called this growth "incomprehensible" and "cosmological". According to estimates, Nvidia's peak value could be around $1.6 trillion. This puts it on par with Alphabet, Google's parent company. In addition, Nvidia's price-to-earnings (P/E) ratio with forward earnings, a standard measure of share valuation, was 47.49. This is significantly higher than competitors such as Qualcomm (QCOM.O) and Intel (INTC.O). It also exceeds the industry average of 18.09, according to Refinitiv data.

What's Behind Nvidia's Unprecedented Growth?

Kinngai Chan, senior research analyst at Summit Insights Group, noted that the company's valuation is currently high. However, he explained that since AI GPU adoption is still in the very early stages, they expect Nvidia to be able to achieve higher earnings. The competition for AI has led to a strategic shift among major tech companies and is backed by hopes that the technology will boost demand. According to analysts, creative AI is powered by powerful graphics processing units (GPUs), 80% of which are manufactured by Nvidia.

The success of OpenAI's ChatGPT has encouraged tech giants like Alphabet and Microsoft to invest heavily in creative AI. Also, under the leadership of CEO Jensen Huang, Nvidia has led the company long known as a gaming chip giant to pivot to the data center market in recent years. Nvidia's business has seen significant expansion during the pandemic with gaming, cloud adoption and crypto mining using chips. Huang's statements on artificial intelligence are likely to support the company's growth in the coming months.

Nvidia's stock has soared by nearly 25% in the last week, setting off a race in AI-related stocks. Other chipmakers have also stepped up their efforts in this area. As a result, the Philadelphia SE Semiconductor index (.SOX) closed at its highest level in over a year last Friday. Analyst Jim Kelleher of Argus Research explained that technical investors and the AI craze have pushed Nvidia closer to the $1 trillion mark.