Nvidia’s stock is closing in on a $1 trillion valuation

Why is Nvidia’s stock surging?

The demand for Nvidia’s chips comes as the leading tech companies of the world are racing to apply generative AI into their services. Microsoft uses tens of thousands of Nivdia’s chips, called A100, to power ChatGPT. A single chip reportedly costs $10,000.

In addition to Microsoft, Nvidia counts Google and Meta—who are leading the AI boom—as customers. “[W]e have also procured a substantial amount of supply for the second half,” of the year, Colette Kress, CFO of Nvidia, said on a conference call with investors and analysts on May 24.

It’s a turnaround for Nvidia, where revenue, similar to other semiconductor companies, fell last year due to declining demand for gaming after a pandemic boom and crypto mining.

The company’s solid performance boosted its competitor Advanced Micro Devices’ stock by 11%. Meanwhile, Intel’s stock dropped 5%.