Due to investor trust in the development of artificial intelligence, Nvidia became the first publicly traded firm to be valued at $5 trillion on Wednesday.
In early morning trade, Nvidia’s shares increased $9.08, or 4.5%, to $210.11, increasing its market valuation to $5.1 trillion. Less than four months after reaching a $4 trillion market value in July, the corporation crossed the new barrier.
Growing demand for the Santa Clara, California-based company’s graphics processing units (GPUs), which are utilized in both video games and AI applications, has been encouraging. This year, the company’s shares have increased by 51% due to plans to launch new products, such an upgraded quantum computing platform, and develop alliances with companies like OpenAI and Palantir, who are leaders in artificial intelligence.
Wedbush analyst Dan Ives stated in a research note dated October 28 that Nvidia’s chips continue to be the new oil or gold in the globe for the tech ecosystem because there is only one chip in the world driving this AI revolution, and it’s Nvidia.
Reaching the new market benchmark highlights the disruption brought about by AI, which is generally considered to be the largest change in technology since Apple co-founder Steve Jobs introduced the original iPhone eighteen years ago. Apple became the first publicly listed corporation to be valued at $1 trillion, $2 trillion, and finally $3 trillion due to the popularity of the iPhone.
However, some on Wall Street are raising worries about a potential AI bubble. Earlier this month, Bank of England officials issued a warning about the increasing danger that tech stock values boosted by the AI boom might bust. The stock market as a whole has benefited from the rise of AI-related firms; on Tuesday, the S&P 500 touched a record high.
In an email, Jeff Buchbinder, chief equity strategist for LPL Financial, referred to the 2001 crash in internet-based companies and stated that the rally, driven by technology stocks riding the artificial intelligence wave, has led many market watchers to wonder if the stock market is in a bubble and if dotcom crash 2.0 might be coming.
However, he noted that there are significant distinctions that make the comparison less accurate, such as the fact that businesses investing in AI now are wealthy and have solid business strategies that provide “massive cash flow.”
“We don’t think technology’s run is necessarily over,” he said.
