Nvidia’s stock surged this week. How the AI boom played a role

Nvidia Corp closed in on a trillion-dollar market value on Thursday as shares surged 25 per cent following a bumper earnings report.

Nvidia Corp closed in on a trillion-dollar market value on Thursday as shares surged 25 per cent following a bumper earnings report that forced Wall Street to reassess the potential windfall for the chipmaker from an artificial intelligence boom.

Here’s an explainer on Nvidia and its role in AI boom.

The semiconductor company’s shares have risen more than 160 per cent this year, adding $586 billion in market value, and making it the fifth most valuable U.S. company behind Apple, Microsoft, Alphabet and Amazon.

Nvidia, known for its chips used in videogames, pivoted to the data center market over the last few years.

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.

Data center chip business accounted for more than 50 per cent of the company’s revenue in the financial year ended Jan. 29.

The viral chatbot, ChatGPT, has made generative AI a buzzword this year. The technology uses vast troves of pre-existing data to create new content ranging from poems to images and even computer code.

Microsoft Corp and Alphabet Inc-owned Google, two of the biggest players in the space, believe that generative AI can change how work is done. The two have raced to add the technology to their search engines and productivity software as they seek to dominate the industry.