Artificial intelligence (AI) stocks witnessed an upswing in extended trade on Wednesday, gaining nearly $300 billion in market capitalization. The catalyst behind this surge was the upbeat revenue forecast from chipmaker NVIDIA Corporation (NASDAQ: NVDA) and its proactive measures to ramp up AI chip production to meet the soaring demand.
Immediately after the bell, the Nvidia stock shot up about 28%, reaching an all-time high of $391.50. This surge propelled the company’s stock market value by approximately $200 billion, pushing it beyond the $960 billion mark. This remarkable feat solidified NVIDIA’s position as the world’s most valuable chipmaker and the fifth-most valuable company on Wall Street.
NVIDIA Corporation (NASDAQ: NVDA) beat Wall Street estimates for quarterly revenue by more than 50%. In a statement, the Chief Executive Officer, Jensen Huang, emphasized that they are significantly increasing their supply to meet surging demand for their data center chips.
The news caused a ripple effect, as shares of rival chipmaker Advanced Micro Devices (NASDAQ: AMD) surged by 10%. In addition, tech giants Microsoft Corporation (NASDAQ: MSFT) and Google parent Alphabet (NASDAQ: GOOG) that actively incorporate generative AI into their Web search platforms rose about 2%.
The excitement surrounding AI also spilled over into the software sector, as AI software maker C3.ai (NYSE: AI) and Palantir Technologies (NYSE: PLTR), a company that recently unveiled its own AI platform, witnessed an incredible surge of approximately 8%.
AI technology gained significant traction this year, particularly with the introduction of OpenAI’s groundbreaking ChatGPT. The innovative platform quickly amassed a user base of over a million within just one week of its launch. Leveraging historical data, generative AI can create fully formed content, including text, images, and software code.
The positive sentiment regarding AI had already driven the NVIDIA stock to an impressive 109% surge in 2023. This rally established NVIDIA as the leading performer in the S&P 500 thus far this year. NVIDIA stock is now trading at around 60 times the expected earnings, nearing its peak of 68 times the expected earnings in 2021, according to Refinitiv data.
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