On Tuesday, Nvidia became the first chipmaker to join the trillion-dollar club, surpassing $1 trillion in market capitalization.
The gaming and artificial intelligence chip company, whose shares rose 4,2% in early trading on Tuesday, was valued at $1 trillion.
Taiwan Semiconductor Manufacturing (TSMC) is the next largest chip manufacturer in the world, valued at approximately $535 billion.
Meta Platforms, valued at nearly $670 billion as of last close, clinched the trillion-dollar market cap milestone in 2021, while Apple, Alphabet, Microsoft and Amazon are other US companies that are part of the club.
Wall Street analysts have pushed up price targets in droves, calling Nvidia's forecast "unintelligible" and "cosmological." The highest price target gave the company about $1,6 trillion, on par with Google-parent Alphabet.
“Given the valuation is well above the long-term average, there will be significant pressure to maintain consistently high growth … the share price may fluctuate in the future,” said Susannah Streeter, head of money and markets. “Hargreaves Lansdown,” he said.
Artificial intelligence came into focus after Nvidia surprised investors last week with a revenue estimate that exceeded analysts' expectations by more than 50%.
“Nvidia is currently the poster child for AI,” said Thomas Hayes, head of Great Hill Capital. “The market is reaching consensus on whether this AI trend is real.”
Nvidia's shares rose nearly 25% last week, sparking a rally in AI-related stocks and bolstering other chipmakers, helping the Philadelphia SE Semiconductor index close Friday at its highest in more than a year.
The rapid success of OpenAI's ChatGPT has prompted tech giants like Alphabet and Microsoft to make the most of generative AI that can deliver human-like conversations and make everything from jokes to poems.