Computer chipmaker Nvidia surged to a record close on Monday after the world’s most valuable chipmaker unveiled new desktop graphics processors taking advantage of artificial intelligence. The Santa Clara-based company is a crucial beneficiary of the AI computing boom, and its forecast for surging sales propelled its stock into the constellation of Big Tech’s brightest stars.
The maker of the GPU chip that’s used in videogames and other consumer electronics unveiled its GeForce RTX 40 SUPER Series of graphics processors, aimed primarily at videogame enthusiasts. Its new products are designed to support the new real-time ray tracing technology used in games to create more realistic lighting and shadows. Nvidia also introduced a new high-end GPU designed to be an AI accelerator and a range of other products to enable developers to create and host AI applications using its platform.
Nvidia’s revenue from its data center chips nearly doubled to $10.3 billion in the quarter that ended in July, and the division is now the company’s primary source of income. Demand for Nvidia’s specialized chips is so strong that its chief executive, Jensen Huang, proclaimed a “new computing era” in a statement on Wednesday. Companies ranging from software vendors like Salesforce and CrowdStrike to cloud service providers such as Amazon Web Services are buying more chips to use in their AI systems, and Nvidia is the leading supplier.
Nvidia has carved out an early lead in the market for the hardware and software needed to take advantage of the AI shift, partly because Huang began nudgeing the company into what was once seen as half-baked technology more than a decade ago. The company has since dominated the market for chips that accelerate AI software by bombarding it with vast quantities of data. It has rapidly advanced chips capable of running generative AI, which can automate the creation of stories, art, and music.
Investors have been eager for evidence that the AI craze is translating into higher demand for the components that run the software. Nvidia delivered a forecast of booming sales that dwarfed the average analyst estimate. That helped to fuel a global rally in stocks of companies that make components essential to AI development and hosting, including data center equipment suppliers like TSMC, Advantest, and Hynix.
Nvidia’s market cap now tops $80 billion, and its shares have risen more than 50% this year, the best performance of any technology stock. The stock has also sparked a broader jump in stocks linked to the AI boom, with technology companies such as Salesforce and HubSpot doubling this year as investors turn their attention to technologies that will power self-driving cars and automated business processes. However, some observers caution that the excitement could be overdone and lead to overpaying for such stocks. According to analysts, investors should carefully analyze each company’s prospects and financials before making a buy decision.
