Nvidia is becoming the first US chipmaker valued at over $1 trillion

May 31, 2023: On Tuesday, Nvidia initially reached a $1 trillion market cap, joining a small club of mostly technology companies. Nvidia’s shares must hold above $404.86 to maintain that distinction throughout the day.

The stock ascended about 6% in trading.

The chipmaker’s shares soared the previous week after it posted quarterly earnings with top- and bottom-line numbers that significantly beat consensus estimates. Nvidia’s gain buoyed further chipmakers, with the notable exception of Intel, and was also fueled partly by more optimistic-than-expected estimates.

Seriously, Nvidia predicted $11 billion in deals for the second quarter of fiscal 2024 alone. The anticipated sales were 50% higher than consensus assessments of $7.15 billion.

It’s been a banner year for chipmakers, parts of the tech industry, and the Nasdaq, driven partly by the artificial intelligence frenzy and the possibility of slowing Federal Reserve rate hikes. Alongside Nvidia, Alphabet, Meta, and Microsoft were also buoyed in the previous week’s trading.

Nvidia’s graphics processing teams, or GPUs, are critical to generative AI platforms like OpenAI’s ChatGPT and Google’s Bard. The company has led the so-called discrete or stand-alone GPU field. Still, until recently, many consumers thought of GPUs as mainly used for intensive gaming.

The advent of crypto mining and AI has upended that belief. GPU manufacturers and suppliers, including Nvidia, Advanced Micro Devices, and Taiwan Semiconductor Manufacturing, have significantly increased share prices over the last few months.

By contrast, Intel, which worked with inventory issues and development challenges, has been historically focused on the chip market for central processing units, or CPUs. The group has yet to share in the wave of investor appeal.

On Tuesday, Nvidia’s market cap places it alongside a handful of other companies, including Apple, Alphabet, Amazon, and Microsoft, with a $1 trillion or more valuation. Nvidia shares were already up 166.5% year to date before Tuesday’s beginning.