Chips: Nvidia soars on the stock market and becomes the first capitalization in the sector

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Even the most optimistic analysts did not expect such forecasts. Nvidia soared 28% on the stock market on Wednesday evening after saying it expected second-quarter sales to be more than…

Chips: Nvidia soars on the stock market and becomes the first capitalization in the sector

Chips: Nvidia soars on the stock market and becomes the first capitalization in the sector

Even the most optimistic analysts did not expect such forecasts. Nvidia soared 28% on the stock market on Wednesday evening after saying it expected second-quarter sales to be more than 50% higher than Wall Street estimates. The semiconductor manufacturer is taking full advantage of the growing demand for its chips, used to run artificial intelligences like ChatGPT.

In trading after the close in New York, the stock broke a record hitting $391.50. The market valuation of the group thus climbed by 200 billion dollars, to reach 950 billion. This propels it as the first global capitalization in the sector and the fifth largest on Wall Street.

An “incredible” rhythm

As Bloomberg notes, this is one of the biggest one-day valuation jumps in US corporate history. “What can we say other than ‘wow,’” an Evercore ISI analyst said in a note. “The obvious drivers of this gain are accelerated computing and generative AI, but the magnitude of the pace – given the industry’s supply constraints – is simply amazing.”

This push has benefited all stocks in the chips. Taiwanese giant TSMC, which makes Nvidia’s chips, rose 3.8% in Taipei. Equipment maker Advantest jumped 20% to a record high in Tokyo, while Hynix rose 6.8% in Seoul. In Europe, ASML, world leader in the manufacture of machines for semiconductors, gained 5% and the French Soitec advanced by 5.7%.

Nvidia plans to increase its offer

In detail, Nvidia forecasts a turnover of 11 billion dollars for the current quarter, closing at the end of July, where analysts polled by Refinitiv expected 7.15 billion dollars. In the last quarter, which began at the end of January, the Santa Clara-based company achieved a turnover of 7.19 billion dollars, down 13%, but well above the 6.52 billion expected by analysts. .

Nvidia chief executive Jensen Huang said the company will “dramatically increase supply to meet growing demand” for its entire family of data center-friendly chips. This particularly concerns the H100, a recently launched chip costing tens of thousands of dollars, designed expressly for the needs of large language models such as OpenAI’s GPT-4.

A place of choice in the race for AI

In the race for AI, the chip designer confirms to occupy a place of choice. While Microsoft and Google engage in a battle of titans to impose their respective technologies, the group places its pawns behind the scenes, at the heart of the machine, by providing the computing power necessary for these sophisticated artificial intelligences.

World leader in graphics processors (GPU), Nvidia designs chips initially intended to improve the creation of images, particularly in video games. But their use has been extended because they excel in what is known as parallel processing, making them well suited for this new use in AI.

Compared to the emergence of the Internet or the iPhone, the advent of generative AI promises an upheaval in society from which Nvidia hopes to benefit. “Trillion-dollar data processing infrastructures will transition to accelerated computing as companies use generative AI in all their products and services,” the CEO said. In addition to its data center business, the group has created online services and software tools to help encourage wider adoption of this technology.

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