On May 25, the chip designer's shares rose 25%, extending their year-long rally after a stellar forecast revealed that Wall Street has yet to price in the company's AI potential, which has already doubled in value by 2023.
Nvidia's stock, which hit an all-time high in premarket trading, was expected to increase its market capitalization by about $189 billion to $945 billion.
The positive earnings also triggered a rally in the chip sector and AI-focused companies, lifting stock markets from Japan to Europe. Companies such as Alphabet Inc, Microsoft Corp, and AMD rose between 2% and 8% in the United States.
"In the 15+ years we've been doing this job, we have never seen a guide like the one Nvidia just put up with the second-quarter outlook that was by all accounts cosmological, and which annihilated expectations," Bernstein analyst Stacy Rasgon said.
Nvidia, the fifth-most valuable company in the United States, forecasted quarterly revenue that was more than 50% higher than Wall Street estimates and said it would have more supply of AI chips in the second half to meet increased demand.
As generative AI is applied to every product and service, CEO Jensen Huang stated that $1 trillion in current data centre equipment would have to be replaced with AI chips.
The results bode well for Big Tech companies, which have shifted focus to AI in hopes the technology would help attract demand at a time their profit engines of digital advertising and cloud computing are under pressure from a weak economy.
