Nvidia shares are rising after huge gains as artificial intelligence demand drives growth in the chip sector

Nvidia gained 9% on Thursday as its record revenue forecast boosted investor confidence in an artificial intelligence-fueled chip demand boom, lifting shares across the semiconductor sector.

Expectations were high for Nvidia, with its stock trading at near-record highs in the run-up to earnings. The results also ended a good quarter for American technology giants, including Microsoft, in which artificial intelligence became the main driver of growth.

“Companies, especially Big Tech, continue to increase their capital expenditures to keep pace with this revolutionary technology, and Nvidia is by far the biggest beneficiary,” said Josh Gilbert, market analyst at eToro.

On Wednesday, the company also announced a 10-to-one stock split and raised its quarterly dividend 150% as demand continues to outpace supply for its high-end chips that run virtually all AI applications, including OpenAI’s ChatGPT.

Already the third most valuable company in the world, Nvidia was expected to add $210 billion to its market value of $2.335 trillion.

Its shares have surged above $1,000, and a close above that level would be a milestone for the company, whose shares are up more than 90% this year after more than tripling in 2023.

Thursday’s jump was also in line with expectations from Taiwanese contract chipmaker TSMC, a major supplier of Nvidia, of 10% annual growth in the global semiconductor industry, excluding memory chips.

Shares of US-listed TSMC rose 1.9%, while shares of other AI-focused semiconductor companies such as Advanced Micro Devices, Arm, Broadcom and Super Micro Computer gained between 2.2% and 9%. 2%.

Analysts welcomed comments from Nvidia executives that shipments of new Blackwell AI chips will begin in the current quarter and that demand for processors could exceed supply “well into next year.”

CEO Jensen Huang told Reuters he expects new artificial intelligence models that can create video and engage in human-like voice interactions to boost orders for Nvidia processors.

“We believe that with years of competition under its belt, Nvidia can comfortably defend and maintain its market share,” said Ido Caspi, a research analyst at Global X, which invests in Nvidia.

“Sustained demand for Hopper (Nvidia’s current chips) should help allay investor concerns about potential customer delays while waiting for the switch to Blackwell.”

Analysts also say a stock split could make Nvidia more attractive to retail investors after declining interest this year.

At least 28 of 58 brokerages raised their price targets for the stock, raising the median to $1,180, according to LSEG data.

Nvidia has a trailing 12-month price-to-earnings ratio of 34.7 compared to 38 for AMD and 26.8 for Super Micro Computer.