Stocks related to artificial intelligence surged in extended trade on Wednesday, adding almost $300 billion in market capitalization after chipmaker Nvidia Corp forecast strong revenue growth and said it was boosting production of its AI chips to meet surging demand.
Nvidia's stock zoomed as much as 28% after the bell to trade at $391.50, its highest level ever. That increased its stock market value by about $200 billion to over $960 billion, extending the Silicon Valley company's lead as the world's most valuable chipmaker and Wall Street's fifth-most valuable company.
"With all the enthusiasm around AI and the fact Nvidia delivered a huge beat for first-quarter results and second-quarter estimates, this gives some actual evidence AI is for real," said Daniel Morgan, senior portfolio manager at Synovus Trust in Atlanta. Morgan said Synovus owns Nvidia shares.
Nvidia forecast quarterly revenue more than 50% above Wall Street estimates, with Chief Executive Officer Jensen Huang saying in a statement that the company is "significantly increasing our supply to meet surging demand" for its data center chips.
Shares of other corporations related to AI rallied on the back of Nvidia's strong report, adding another nearly $100 billion in stock market value after the bell. Rival chipmaker Advanced Micro Devices Inc jumped 10%. Microsoft Corp and Google parent Alphabet Inc, which are both rushing to incorporate regenerative AI into their Web search platforms, each rose about 2%.
AI software maker C3.ai and Palantir Technologies, which recently launched its own AI platform, both soared about 8%.
Interest in AI surged this year after startup OpenAI introduced ChatGPT, attracting over a million users within a week. Using past data, generative AI can create brand new content like fully formed text, images and software code.
Ahead of Nvidia's report on Wednesday, optimism around AI had already fueled a 109% surge in its stock so far in 2023, making the chipmaker the S&P 500's top performer year-to- date. That rally left Nvidia trading at about 60 times expected earnings, approaching its peak of 68 times expected earnings in 2021, according to Refinitiv data.
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