Nvidia is stunning the markets and signaling how artificial intelligence will transform the tech sector

WASHINGTON (AP) — Shares of Nvidia, already one of the most valuable companies in the world, soared Thursday after the chipmaker forecast a huge jump in sales, signaling how much the increasing use of artificial intelligence could transform the tech sector.

The California-based company is about to join the exclusive club of $1 trillion companies like Alphabet, Apple and Microsoft after shares surged 25% in early trade.

But its projections for $11 billion in revenue this quarter took Wall Street by surprise. That’s a 64% increase year over year for the same period and well above the $7.2 billion forecast by industry analysts.

“It looks like another gold rush is on the horizon, and NVIDIA is selling all pickaxes and shovels,” Susquehanna Financial Group’s Christopher Rolland and Matt Myers wrote on Thursday.

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Chip manufacturers around the world have been pulled along. Shares of Taiwan Semiconductor rose 3.5%, while shares of South Korea’s SK Hynix gained 5%. Netherlands-based ASML was up 4.8%.

Jensen Huang, Founder and CEO of Nvidia said that the world’s data centers are in need of a refresh given the transformation that will come with AI technology.

“The world’s $1 trillion data center is now populated almost entirely with CPUs,” Huang said. “And $1 trillion, $250 billion a year, it’s growing, of course, but in the last four years, let’s say $1 trillion worth of infrastructure has been installed, and it’s all based entirely on CPUs and dumb NICs . It’s basically unaccelerated.”

Analysts say Nvidia could get its first glimpse of how AI could transform the tech sector.

“Last night, Nvidia released stunning, solid predictions that will be heard around the world, demonstrating the historic demand for AI that now exists in the enterprise and consumer landscape,” wrote Wedbush’s Dan Ives. “For any investor who calls this an AI bubble…” We would like to alert them to this Nvidia quarter and in particular guidance that supports our optimistic thesis regarding AI and points to the fourth industrial revolution, which is now with AI ahead the door stands.”

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Brian Ashcraft

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