Nvidia (NVDA) – Get Free Report shares extended gains Tuesday, taking them close to the $1 trillion market cap level, after the chipmaker unveiled plans to build a new AI-powered super computer for the Israeli government following its blowout first quarter earnings last week.
CEO Jensen Huang also unveiled a host of new AI-related products at the Computex compter conference in Taiwan overt the weekend, including a new super computing platform, known as DGX GH200, which can helped tech companies create their own, scaled-up versions of OpenAI’s ChatGPT.
The chipmaker also unveiled plans to team-up with Britain’s WPP plc, the world’s largest advertising company, and also unveiled a system known as ACE Games to boost the level of background character designs in various new releases.
“Accelerated computing and AI mark a reinvention of computing,” said Huang. “We’re now at the tipping point of a new computing era with accelerated computing and AI that’s been embraced by almost every computing and cloud company in the world.”
Nvidia, which added nearly $185 billion in market value last week after blasting first quarter earnings forecasts, was marked 4% higher in pre-market trading to indicate an opening bell price of $405.01 each, extending the stock’s year-to-date gain to around 177%.
Rival chipmakers were also moving higher in the wake of Nvidia’s revenue guidance, with Advanced Micro Devices (AMD) – Get Free Report shares up 3.8% and Micron (MU) – Get Free Report adding 1.5%. AI leaders in the search markets were also on the move, with both Microsoft (MSFT) – Get Free Report and Google parent Alphabet (GOOGL) – Get Free Report rising 1.3%
The Philadelphia Semiconductor Index (SOXX) – Get Free Report, the chip sector benchmark that tracks the 30 leading semiconductor companies, hit a 14-month high of 3,545.67 points last week, extending its year-to-date surge to around 40%.
Only five U.S. companies — Meta Platforms (META) – Get Free Report, Amazon (AMZN) – Get Free Report, Apple (AAPL) – Get Free Report, Google and Microsoft — have surpassed the $1 trillion market cap threshold, with the iPhone maker topping that milestone in early August of 2018.
Last week, Nvidia said it sees current quarter revenues of around $11 billion, more than 50% ahead of Street forecasts, with a gross margin of around 70%. That likely equates to earnings in the region of $2.04 per share, nearly double the Street’s prior $1.07 per share forecast for the quarter.
For the three months ending in April, Nvidia also blasted Street forecasts with a bottom line of $1.09 per share on revenues of $7.19 billion, powered by record data center sales of $4.28 billion, a 14% increase that Nvidia said was led by growing demand for generative AI and large language models using GPUs based on our NVIDIA Hopper and Ampere architectures”.
“The Big Tech earnings season was dominated by relentless AI detail, and dazzling earnings from Nvidia have added more fuel to the already high-octane AI boom,” said Nigel Green of London-based deVere Group. “Naturally, investors don’t want to miss out, but they must take a cautious approach to the AI boom to avoid getting ‘burned.”
Green recommends focusing on big-cap names over smaller rivals, given their advantage in being able to invest cash reserve in new R&D, while taking a longer-term approach guided by a good fund manager that will “help select winners from losers, allowing you to make informed, balanced decisions to build your wealth.”