In a remarkable turn of events, stocks related to artificial intelligence experienced a massive surge in extended trade on Wednesday. This surge resulted in an astounding increase of nearly $300 billion in market capitalization, all thanks to chipmaker Nvidia Corp’s optimistic revenue forecast and their efforts to boost the production of AI chips to meet the skyrocketing demand.
Immediately after the bell, Nvidia’s stock shot up an astonishing 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. Nvidia’s tremendous achievement solidified its position as the world’s most valuable chipmaker and the fifth-most valuable company on Wall Street.
Notably, Nvidia’s forecast for quarterly revenue exceeded Wall Street estimates by over 50%, leaving industry experts astounded. In a statement, the company’s Chief Executive Officer, Jensen Huang, emphasized that they are “significantly increasing our supply to meet surging demand” for their data center chips.
The news of Nvidia’s remarkable performance caused a ripple effect, as shares of rival chipmaker Advanced Micro Devices, Inc. (NASDAQ: AMD) surged by 10%. In addition, tech giants Microsoft Corporation (NASDAQ: MSFT) and Google parent Alphabet Inc, (NASDAQ: GOOG) both actively incorporating generative AI into their Web search platforms, experienced a solid rise of about 2%.
The excitement surrounding AI also spilled over into the software sector, as AI software maker C3.ai, Inc. (NYSE: AI) and Palantir Technologies Inc., (NYSE: PLTR) a company that recently unveiled its own AI platform, witnessed an incredible surge of approximately 8%.
The growing interest in AI technology throughout the year gained further momentum when startup OpenAI unveiled its revolutionary ChatGPT, attracting over a million users within a week. By utilizing past data, generative AI can now create fully formed content, including text, images, and software code.
It’s worth noting that prior to Nvidia’s groundbreaking report, optimism surrounding AI had already propelled the company’s stock to a remarkable 109% surge in 2023. This outstanding rally positioned Nvidia as the top performer in the S&P 500 so far this year. As a result, the chipmaker’s 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.