The share price of the US chip manufacturer Nvidia jumped by almost 30 percent on Thursday night, according to the confident forecasts of the board. At $391 per share, the price reached the highest level in the company's history to date. The market value is now approaching the one trillion dollar mark. This makes Nvidia one of the most valuable corporations in the world.
The flight of fancy was triggered by the Management Board with its extremely optimistic prospects for the further course of business. Sales, revenue and profit could continue to rise to record levels. Above all, the boom in artificial intelligence (AI) systems is driving demand for the company's semiconductor components. Nvidia specializes in chips that can process very large amounts of data very quickly.
Two revolutions at the same time
These chips are used, among other things, in AI systems. These systems are being used more and more in everyday life as well as in industry. "The computer industry is going through two phases of upheaval – accelerated computing and generative artificial intelligence," said Jensen Huang, founder and CEO of the company. Companies of virtually all industries and all sizes would incorporate AI technology into their products and services.
This requires new technologies in tens of thousands of data centers around the world, among other things – and that's exactly why Nvidia has developed and designed a family of high-performance chips, says Huang. Since Nvidia does not have its own factories for the production of chips, it uses various contract manufacturers such as the Taiwanese TSMC and UMC groups for mass production. Partners, suppliers and competitors are also benefiting from the boom in demand for artificial intelligence systems and the graphics and AI chips required for them.
$500 share price in sight
With the jump in Nvidia's share price, the price of competitor AMD's shares also rose by around 8 percent; TSMC rose 4 percent. The shares of equipment suppliers such as the Dutch ASM International Group rose 8.5 percent, those of ASML just under 6 percent. Both manufacture the machines used to produce the latest generation of chips. Analysts at major investment banks do not see the end of Nvidia's price increase. The British bank Barclays believes that a price of 500 dollars per share is possible in the foreseeable future – and Huang continues to fuel these fantasies.
For example, the CEO expects sales to jump to $11 billion for the current quarter. According to a statement from Nvidia, a gross margin of up to 70 percent is targeted. That is, the concern is one of the most profitable companies in the world. Huang founded Nvidia 30 years ago as a design house for high-performance chips for video game computers. At the end of the nineties, he took Nvidia public. Ten years later, it became clear that Nvidia chips can also be used well in the development of AI systems.
Over the past few years, this has led Huang to position his company more and more at the center of this development. He poured billions into research, refined his company's business model, hired top engineers, and thus placed himself at the forefront of technology around complicated AI chips. With the release of AI systems such as ChatGPT via the world's data networks, artificial intelligence is virtually popularized – and Nvidia actually sees this popularization coming its way.
For the past quarter, the Management Board reports sales of 7.1 billion dollars. This was 19 percent more than in the previous quarter, but 13 percent less than in the same period last year. The bottom line is that the group reported a surplus of 2 billion dollars for the past three months. This was 44 percent more than in the previous quarter and 26 percent more than a year ago.