Nvidia (NVDA:NASDAQ) is closing in on a trillion dollar market valuation after revealing the scale of interest it is seeing from customers for artificial intelligence (AI) technology.

The Santa Clara-based chip designer unveiled the explosion of AI-powered technology demand in first quarter results (24 May) that blasted past analyst forecasts. Yet it was Nvidia’s 50% jump in second quarter guidance that really took investors’ breath away and sent the share price skyrocketing.

Nvidia’s share price has rallied almost 30% since the news to record levels above $400, piling an extra $240 billion onto the company’s market valuation and breaking the trillion-dollar mark, joining Apple (AAPL:NASDAQ), Microsoft (MSFT:NASDAQ), Amazon (AMZN:NASDAQ) and Alphabet (GOOG:NASDAQ) in this most exclusive of clubs.

Nvidia announced EPS (earnings per share) of $1.09 for the three months to 30 April 2023 on revenue of $7.19 billion. Analysts polled by Investing.com anticipated EPS of $0.92 on revenue of $6.52 billion, implying beats of 18% and 10% respectively.

First quarter revenue from the chip designer’s data centre business hit a record $4.28 billion, up 14% from a year ago and 18% higher versus the previous quarter. That helped offset weakness in its gaming business, where revenue dropped 38% to $2.24 billion from a year ago.

Demand for AI everything is surging thanks to the launch of OpenAI’s ChapGPT and other chatbot technologies. Shares explained some of the everyday use cases in AI in a recent feature and Nvidia could not resist the temptation to fuel the market’s excitement.

‘A trillion dollars of installed global data centre infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process,’ the company said.

‘Our entire data centre family of products is in production. We are significantly increasing our supply to meet surging demand for them,’ it added.

Nvidia flagged an AI ‘inflection point’ back in February 2023, setting up for broad adoption reaching into every industry. ‘From start-ups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI,’ Nvidia chief executive Jensen Huang said at the time.

Yet even Huang must be stunned by how fast companies are jumping on the technology industry’s next big thing. This is evident from the firm’s second quarter revenue guidance hike of more than 50%. Nvidia said it anticipated second quarter revenue of around $11 billion, ‘plus or minus 2%.’ Consensus had been pitched at $7.13 billion.

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