Nvidia Races to Dominate AI Chip Market Amid Explosive Demand Surge

Nvidia is leading AI chip innovation as global demand for semiconductor technology rises, emphasizing AI’s pivotal role in the evolving tech-driven economy.

As companies around the world rush to create and use AI technologies, the semiconductor industry has become more and more important to this progress.

In this situation, Nvidia has gained increased recognition as a leading manufacturer of graphics processing units (GPUs) and AI chips. This shows how AI is becoming more important in the world economy and how the tech industry is changing.

This trend has changed the semiconductor industry, and Nvidia’s GPUs are now essential parts of the AI infrastructure of many of the world’s biggest tech companies.

LSEG, a global provider of infrastructure and data for financial markets, says that Nvidia is the first company in history to have a stock market value greater than US$3.6 trillion.

The market value of Nvidia rose to US$3.65tn on Thursday, when its shares hit a new high. Nvidia’s stock price went up at the same time that Wall Street’s rally began with Trump’s return to the White House.

Shares of the company went up by 2.2% because investors were hopeful that the new Republican administration would cut taxes and make rules less strict. With this rise, Nvidia passed Apple as the most valuable company in the world. Apple’s market value now stands at US$3.44tn, after its stock price rose 2.1%.

The company was among the first to develop chips specifically designed for AI applications. These chips are becoming more and more important for tech giants like Microsoft, Alphabet, and others as they expand their AI computing capabilities.

Also, people can’t get enough of Nvidia’s AI chips, especially its H100 GPU. A business group called Mizuho Securities says that Nvidia’s AI accelerators make up 70% to 95% of the market for AI chips.

Nvidia’s top AI GPUs and its CUDA software, which has established itself as the industry standard for AI development, have underpinned this dominance. The rise in the value of Nvidia is also part of a larger trend in the tech industry.

For instance, in the two trading days following Trump’s election victory, the S&P 500 technology index, which includes companies like Apple and Microsoft, has increased by more than 4%.

This shows that investors are generally positive about how a Republican administration might help the tech industry. Also, Nvidia’s stock price has gone up 12% just in November, and it has tripled in value so far in 2024.

Because of this amazing growth, the market value of the company is now higher than the combined worth of several large companies, such as Walmart, JPMorgan, Visa, UnitedHealth Group, and Netflix. Even though Nvidia is currently the market leader, the AI chip market is getting more and more competitive.

AI Chip Market to Reach US$400bn in 5 Years

Market analysts and AMD say that the AI chip market will reach US$400bn in annual sales in the next five years. This shows that this sector has a lot of room to grow. Analysts think that Nvidia will also report an 80% rise in quarterly sales, bringing the total to US$32.9bn, when it reports its results on November 20.

At the top of the market valuation rankings, however, there is still a lot of competition. For a short time in June, Nvidia was the world’s most valuable company. However, Microsoft and Apple quickly passed them.

For several months, these two tech giants’ market values have been very close to each other. As of Thursday, Microsoft’s market value was almost US$3.16tn.

Jensen Huang, CEO of Nvidia, says, “Generative AI is the most important technology of our time.”  In the end, he says, “We will realize the promise of AI for every industry by working with the most dynamic companies in the world.”