The power of AI-its stocks soar and roar
Stocks related to artificial intelligence experienced a significant rally, adding nearly $300 billion in market capitalization, following chipmaker Nvidia Corp’s strong revenue growth forecast and increased production of its AI chips. Nvidia’s stock surged by as much as 28% after the announcement, reaching its highest level ever at $391.50. This resulted in a market value increase of approximately $200 billion, pushing Nvidia’s overall value to over $960 billion. The company solidified its position as the world’s most valuable chipmaker and the fifth-most valuable company on Wall Street.
The positive response to Nvidia’s announcement reflects growing confidence in the potential of AI. Daniel Morgan, a senior portfolio manager at Synovus Trust, stated that Nvidia’s strong performance and optimistic forecasts provide tangible evidence that AI is a viable and valuable technology. Other corporations related to AI also experienced gains in stock market value, with Advanced Micro Devices Inc, Microsoft Corp, Alphabet Inc, C3.ai, and Palantir Technologies all witnessing increases.
The interest in AI has been on the rise, particularly after the introduction of OpenAI’s ChatGPT, which attracted over a million users within a week. Generative AI, which can create new content such as text, images, and software code based on past data, has further fueled the enthusiasm for AI technology.
Nvidia’s stock had already seen a significant surge of 109% in 2023 prior to this announcement, making it the top performer in the S&P 500. However, this surge has also led to a high valuation, with Nvidia trading at around 60 times expected earnings, approaching its previous peak of 68 times expected earnings in 2021.
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