What took place
The chipmaker Nvidia (NVDA 0.14%), best known for its graphics processors, saw its shares surge last month as a result of a general upturn in tech equities as well as an increase in interest in all things artificial intelligence (AI)-related following the publication of OpenAI’s ChatGPT.
S&P Global Market Intelligence data shows that the stock ended the month up 34%.
The figure below shows that the stock increased consistently during the month, outperforming the Nasdaq, which increased by 11%.
What then
Nvidia didn’t provide any company-specific news in the previous month, but when market mood changed in January, investors appeared to perceive a buying opportunity after the stock fell 50% in 2017.
Investors were delighted by another Consumer Price Index data that showed the inflation rate continuing to decline and gained confidence that the Federal Reserve will scale back its interest rate increases as a result. It achieved just that at its meeting on February 1 when it hiked rates by just 25 basis points, the smallest increase in almost a year.
The debut of OpenAI’s ChatGPT in November and the simultaneous announcements by Microsoft and Alphabet of a turn to AI, foreshadowing a new tech race in chat-powered search and other AI categories, also appeared to boost interest in Nvidia shares.
Near the end of the month, C3.ai and other AI-related stocks increased in value, and Nvidia—generally regarded as the market leader in AI chips—seemed to benefit. Additionally, a large portion of its revenue comes from chips for data centers, which are anticipated to be in high demand as AI develops into the next technological frontier.
So what?
However, the business appears to be in the semiconductor area at the perfect time once more, and the rise of artificial intelligence bodes well for it.
Analysts predict that sales will drop again, with the top line falling by 21.4% to $6.01 billion and the profits per share falling from $1.32 to $0.81. However, as the development of AI will have a bigger impact on the company’s success over the long run, investors will also be interested in hearing what the management has to say about it.