NVIDIA Corporation (NASDAQ:NVDA) became the latest tech company to join the $1 trillion club Tuesday as a slate of positive recent news - including blockbuster first-quarter earnings - sent its shares soaring.
News that it is launching Israel-1, a supercomputer aimed at meeting soaring artificial intelligence (AI) demand, and a digital advertising deal with the world’s largest advertising company WPP PLC to develop a platform that will create automated digital adverts using AI are just the latest announcements adding to the positive sentiment surrounding the firm.
“The momentum appears to be being generated by optimism over the chipmaker's position at the vanguard of AI chip development,” commented CMC Markets’ Michael Hewson.
“Over the weekend Nvidia CEO Jenson Huang announced a raft of new AI-related products which could help shape how companies network and advertise.”
NVIDIA's shares were 5.5% up at $411.01 shortly before noon on Tuesday, valuing it at $1.02 trillion. A close at that level would clinch its place in the club.
However, ARK Invest founder and CEO Cathie Wood is seeing better value elsewhere among firms embracing AI following the steady rise in NVIDIA’s shares since the fund manager started investing.
It appears that investors are cottoning on, sending shares in C3.ai soaring 15% higher ahead of its quarterly results next week, while big data analytics firm Palantir Technologies jumped 10% and software company UiPath jumped 3.8%. Broadcom Inc rallied 8.5%, Qualcomm rose 3.5% and Intel gained 2.3%.
Electric automaker Tesla Inc (NASDAQ:TSLA), the firm Wood singled out as a big beneficiary due to growth in the autonomous mobility market, added 3.4%.
The gains buoyed the tech-heavy Nasdaq in an otherwise cautious trading environment as investors wait for finality on a debt-ceiling deal.
“This continues to be a remarkably bifurcated market. Nvidia’s results continue to power chip makers and other stocks that can be linked to the boom in AI (no matter how tenuously),” said IG’s Chris Beauchamp.
“Meanwhile, in a perhaps unsurprising development, it has proven impossible to maintain the sunny optimism of Friday, when markets surged on news of a debt ceiling deal in principle. While it is still likely that a deal will pass Congress without too many hiccoughs, the risk of a delayed passage has meant that stocks have not seen the triumphant progress to the end of May that seemed likely last week.”
Contact the author at stephen.gunnion@proactiveinvestors.com