Shares of Nvidia (NASDAQ: NVDA) rose (again) on Wednesday, rising as much as 5.2%. At the end of the day, the stock was still up 5.2%, pushing its market cap above $3 trillion for the first time.
Several developments in artificial intelligence (AI) have contributed to the stock’s relentless rise.
The poster child for AI
As a leading provider of graphics processing units (GPUs) used in artificial intelligence (AI), it seems like any positive news in the sector could be a catalyst for Nvidia stock. The phenomenon was fully visible today.
The news made that clear Taiwanese semiconductor productionalso called TSMC, buys an extreme ultraviolet machine with high NA ASML. This is the latest in AI chip technology and Nvidia is TSMC’s second largest customer, giving it full access to this top technology.
In an unrelated development, Hewlett Packard Enterprise reported the results of its second fiscal quarter (ended April 30), and the results exceeded even the most optimistic expectations. While the company posted modest year-over-year profits, it cited growing demand for AI as a catalyst for the better-than-expected results.
What is good for the whole…
What do these developments have to do with Nvidia? Nothing, at least not immediately. However, it does illustrate that demand for AI continues to increase, reinforcing the theory that this is still the case terribly early days for AI. So what is good for AI also seems to be good for Nvidia.
The company is among the biggest beneficiaries of AI adoption, as Nvidia’s processors are the gold standard for AI use cases. Although estimates vary, Nvidia is credited with approximately 90% share of the AI ​​chip market.
Finally, excitement has reached a fever pitch ahead of Nvidia’s 10-for-1 stock split, which is expected to take place after the market closes on Friday.
The adoption of generative AI continues to gain momentum. While estimates vary widely, the size of the market is expected to be between $2.6 trillion and $4.4 trillion in the coming years, according to global management consultancy McKinsey & Company.
The growing body of evidence suggests there is still plenty of room for Nvidia to run.
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Danny Vena has positions at Nvidia. The Motley Fool holds positions in and recommends ASML, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
Why Nvidia Stock Skyrocketed to a $3 Trillion Market Cap on Wednesday was originally published by The Motley Fool
