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    * [13]Technology (BUTTON)

Nvidia joins $1 trillion valuation club on booming AI demand

  By [14]Akash Sriram (BUTTON)
  and [15]Samrhitha A (BUTTON)
  May 30, 20236:42 PM UTCUpdated ago
  The logo of NVIDIA as seen at its corporate headquarters in Santa
  Clara, California
  The logo of NVIDIA as seen at its corporate headquarters in Santa
  Clara, California, in May of 2022. Courtesy NVIDIA/Handout via REUTERS
  (BUTTON)
    * Summary
    * Companies

  (BUTTON)
    * Nvidia one of five $1 trillion U.S. companies
    * Shares up 240% since October
    * AI propels market gains

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  May 30 (Reuters) - Nvidia Corp [16](NVDA.O) joined an elite club of
  U.S. companies sporting a $1 trillion market value on Tuesday, as
  investors piled into the chipmaker that has quickly become one of the
  biggest winners of the AI boom.

  The stock's value has tripled in less then eight months, reflecting the
  surge in interest in artificial intelligence following rapid advances
  in generative AI, which can engage in human-like conversation and craft
  everything from jokes to poetry.

  Nvidia has gained roughly 240% since October, far outpacing any other
  member of the broad-market S&P 500 index. The rally has propelled its
  valuation past its peers, but some analysts say the AI boom means the
  stock should still be worth more.

  Its shares were up 5.7% on Tuesday. Just four other U.S. companies
  currently have a valuation of more than $1 trillion - Apple Inc
  [17](AAPL.O), Alphabet Inc [18](GOOGL.O), Microsoft Corp [19](MSFT.O)
  and Amazon.com Inc [20](AMZN.O).

  "We view Nvidia as the most important company on the planet in an era
  that is rapidly changing towards one that will be emphasized by greater
  AI capabilities," said Angelo Zino, analyst at CFRA Research.

  The latest surge furthers a rally from last week, which was
  jump-started by a [21]revenue forecast that surpassed the mean Wall
  Street estimate by more than 50%, which some analysts called
  "unfathomable" and "cosmological."

  The highest price target values the company at about $1.6 trillion, on
  par with Google-parent Alphabet.

  Nvidia's forward price-to-earnings multiple (P/E), a common benchmark
  for valuing stocks, is 47.49 - is significantly above that of peers
  Qualcomm [22](QCOM.O) and Intel [23](INTC.O) and also tops the sector
  median of 18.09, according to Refinitiv data.

  "While the company's valuation looks lofty at the moment, we think
  Nvidia has the earnings firepower as the adoption of its AI GPU remains
  in the very early innings," Kinngai Chan, senior research analyst at
  Summit Insights Group, said.

GPU CHIPS

  Big Tech companies have shifted focus to AI on hopes the technology
  will attract demand. The computers that power generative AI run on
  powerful chips called graphics processing units (GPUs) - of which 80%
  are produced by Nvidia, according to analysts.

  OpenAI-owned ChatGPT's rapid success has prompted tech giants such as
  Alphabet and Microsoft to make the most of generative AI.

  Nvidia, led by CEO Jensen Huang, has pivoted to the data center market
  over the last few years after years as a powerhouse in videogame chips.

  The company's business rapidly expanded during the pandemic when gaming
  took off, cloud adoption surged and crypto enthusiasts turned to its
  chips for mining coins. Huang's bet on AI is expected to fuel growth in
  the coming months.
  Nvidia breaches $1 trillion market capitalization
  Nvidia breaches $1 trillion market capitalization

  Despite the sky-high valuation, analysts believe Nvidia's AI chips
  business has room for growth as generative AI technology is still at a
  nascent stage with wide adoption expected in the years to come.

  Last week alone, Nvidia's shares rose about 25%, sparking a rally in
  AI-related stocks and boosted other chipmakers. That helped the
  Philadelphia SE Semiconductor index [24](.SOX) close on Friday at its
  highest in over a year.

  "Technical traders and AI mania have pushed Nvidia toward the $1
  trillion cap and it is not inexpensive," said Jim Kelleher, analyst at
  Argus Research.
  Reuters Graphics
  Reuters Graphics
  Reporting by Akash Sriram, Samrhitha Arunasalam Medha Singh and
  Shashwat Chauhan in Bengaluru; Editing by Shounak Dasgupta and
  Saumyadeb Chakrabarty
  (BUTTON)
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  Our Standards: [25]The Thomson Reuters Trust Principles.


  [5b6f19e9-9c72-4833-bac9-599adfc19e72.png]


  [26]Akash Sriram

  Thomson Reuters

  Akash reports on technology companies in the United States, electric
  vehicle companies, and the space industry. His reporting usually
  appears in the Autos & Transportation and Technology sections. He has a
  postgraduate degree in Conflict, Development, and Security from the
  University of Leeds. Akash's interests include music, football
  (soccer), and Formula 1.
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