A.I. Demand Lifts Nvidia Toward Trillion-Dollar Valuation

Shares in the chip maker Nvidia soared more than 20 percent on Thursday, after the company delivered a knockout quarterly sales outlook powered by demand for the processors that run artificial intelligence systems.

“We’re seeing incredible orders to retool the world’s data centers,” Jensen Huang, Nvidia’s chief executive, told analysts Wednesday on a conference call.

Nvidia’s chips are used to power A.I. systems; demand for the chips jumped during the boom in cryptocurrency, whose systems also rely on their processing power. At the close of trading on Wednesday, Nvidia’s market capitalization hit $755 billion, the fifth-highest public valuation in the United States. On Thursday, the company was closing in on the trillion-dollar club.

The A.I. rally has also lifted other chip stocks, including those for AMD, ASML and Taiwan Semiconductor Manufacturing Company. Since the introduction last year of the ChatGPT chatbot, the buzz around A.I. has intensified, making companies at the forefront of the technology, like Microsoft, Google and Nvidia, a popular pick among investors.

The rise in Nvidia’s shares has also propelled the entire market higher, with its surge on Thursday enough to move the S&P 500-stock index up by about half a percent.

Nvidia’s shares have more than doubled in 2023 even as concerns of a budding microchip war between Washington and Beijing hangs over the sector.

But analysts disagree on how long the rally will last. Michael Hartnett of Bank of America called the rise the start of a “baby bubble.” On the other hand, researchers at Goldman Sachs said tools built on A.I. could help bolster the global economy by $7 trillion.

The increased demand for Nvidia’s chips comes amid calls for greater oversight of A.I. technology. After meeting with top European Union officials on Wednesday, Sundar Pichai, the chief executive of Alphabet, promised that Google would work with others to develop A.I. services responsibly.

And starting in July, New York will require companies that use A.I. for job recruitment to inform the candidates, under a new law that is being closely watched by labor advocates.

Joe Rennison contributed reporting.

Bernhard Warner joined the The Times in 2022 as a senior editor for DealBook. Previously he was a senior writer and editor at Fortune focusing on business, the economy and the markets. @bernhardwarner

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