Thanks to AI, the processor giant Nvidia is approaching the trillion dollars in capitalization

The processor specialist Nvidia took off by more than 20% on Thursday on the New York Stock Exchange, the day after the publication of very ambitious forecasts, based on the boom in artificial intelligence.

Around 3:30 p.m. GMT, the title of the group from Santa Clara (California) took 27.50%, which allowed Nvidia to approach one trillion dollars in market capitalization, a very closed circle which only has five members for the moment, including four American technological flagships.

If the gain were confirmed at the close, Nvidia would have gained, in one session, more than 200 billion dollars in value, more than the total market capitalization of Nike, Netflix or Disney.

Founded thirty years ago by the Taiwanese-American engineer Jen-Hsun “Jensen” Huang, this company little known to the general public initially saw its future in video games.

It has thus developed graphics processors (GPUs) intended to improve the quality of images for gamers.

These chips have a computing capacity much greater than that of a conventional computer, a potential that quickly interested developers of artificial intelligence (AI), greedy in data processing.

Some of these GPUs cost tens of thousands of dollars each.

On Wednesday, after the stock market, Nvidia reported results above expectations but above all published an astronomical forecast for its turnover in the second quarter, which would represent an increase of 64% compared to the same quarter of 2022.

During the conference call to present the results, Jensen Huang explained that the world of data processing centers, essential to remote computing (cloud), is undergoing a major transition and a technological upgrade, to face in particular to the new requirements of AI.

The manager estimated that the investments to be made could reach a trillion dollars in the years to come, of which Nvidia intends to capture a significant part.

– The AI ​​revolution –

Nvidia’s products and services “are uniquely positioned to help drive data center transformation,” Bank of America analyst Vivek Arya said in a note.

“We have competition in every way,” admitted Jensen Huang, but “we are the least expensive solution” for companies that want to improve their data processing capabilities.

Nvidia does not just sell processors and offers to design and assemble “data centers” from scratch, says the emblematic boss of the group, known for his relaxed appearance and his taste for leather jackets.

The Californian group is among the best placed to take advantage of the current craze for so-called generative AI, i.e. capable of creating content without human intervention on request in everyday language, thanks to large databases. .

“In 22 years of tech and large-cap coverage, we have never seen a forecast of this magnitude, confirming that the monetization of AI…is well underway,” analysts commented. of Wedbush Securites, in a note.

The group is also benefiting from the ongoing revolution in driver assistance and autonomous driving, a segment in which it more than doubled its revenues in the first quarter.

Nvidia’s enthusiasm contrasts with the rhetoric of major semiconductor makers, who point to a slowdown in the market this year, mainly due to lower demand for personal computers.

This trend has significantly reduced Nvidia’s revenues in video games (-38%), but the growth in activity dedicated to “data centers” is such that it compensates for this deceleration.

For Wedbush, the company’s results and forecasts are a message to “investors who are warning about an AI bubble”, and compare the current vogue for artificial intelligence with crypto or metaverse surges. “The fourth industrial revolution is coming, with AI.”

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