Nvidia Hits $1 Trillion Valuation Thanks to AI Boom

Michael Edgar

30 May 2023, 04.27pm

Nvidia – a company known for designing and manufacturing computer graphics processors (GPU), chipsets, and other software – reached a valuation of $1 trillion (£805.6 billion).

The new valuation is fueled by the heightened interest in the chip and GPU market as companies scramble to join the AI arms race. Nvidia’s GPUs are crucial to generative AI platforms such as ChatGPT or Bard.

The trillion-dollar milestone comes just after Nvidia’s Computex 2023 keynote talk over the weekend. The company announced new AI developments such as Avatar Cloud Engine (ACE) for games to use natural language for input and responses within a videogame.

Our CEO, Jensen Huang, delivered a live keynote at #COMPUTEX2023 unveiling generative #AI platforms for every industry. Catch up on new systems, software and services enabling more efficient workflows. https://t.co/8LpM1QWh2F

— NVIDIA (@nvidia) May 30, 2023

Nvidia also announced a new supercomputer using its latest GH200 Grace Hopper Superchip, capable of calculating at least one quintillion floating point operations per second.

“There’s a war going on out there in AI, and Nvidia today is the only arms dealer out there. So as a result we’re seeing this huge jump in revenues,” Investment bank Raymond James’ managing director Srini Pajjuri recently said in a note to investors.

Nvidia now joins a select group of companies valued over $1 trillion, including Apple at $2.7tn (£2.1tn), Microsoft at $2.4tn (£1.9tn), Alphabet, Google’s parent company at $1.5tn (£1.2tn), and Amazon at $1.2tn (£966bn).

Nvidia is forecasting £8.8bn in sales (plus or minus 2%) during the second fiscal quarter of 2024, outdoing the Wall Street estimates of £5.7bn. Its stock jumped approximately 25% last week, hitting as high as $416 (£335) during the point of publication, up from around $300 (£241) the week prior.

However, speaking with Reuters, Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Given the valuation is well above the long-term average, there will be significant pressure to deliver high growth on a consistent basis,” warning there could be volatility in its share price in the future.