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The reason why Nvidia’s stock price has raisen so much on Nasdaq

Nvidia’s stock price has been on a roll with its stock price rising over thirty percent over the past couple of days thanks to a 15-year-old gamble.

The secret behind Nvidia’s skyrocketing $1 trillion valuation
NVIDIA CORPvia REUTERS

Those who own Nvidia stock are feeling pretty good right now, and those that don’t are wondering if they missed the boat. The tech company that produces graphics processing units (GPU), basically powerful chips, has seen its valuation on the Nasdaq skyrocket in recent days. The rise in Nvidia’s stock price began late last year but the surge that began on 24 May now has those shares value up nearly 180 percent since the beginning of the year.

The sudden bonanza has much to do with a gamble the company made 15 years ago. Started in 1993 by CEO Jensen Huang, Curtis Priem and Chris Malachowsky, Nvidia used to be best known its GPUs use in gaming. However, the company realized that its chips could be used for a far wider range of uses.

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Nvidia chips go from gaming to crypto and beyond

In the mid-2000s, Nvidia created a program that allowed all types of software developers to program Nvidia chips which was called CUDA, or Compute Unified Device Architecture, that is a parallel computing platform and application programming interface. This gave rise to the company’s GPUs use in developing cloud computing and crypto mining.

However, it was how they were being applied in the niche computer science investigations into artificial intelligence (AI) in university labs that caught the attention of Huang. The company made a decision to make chips especially for use in AI in 2007. According to analysts, Nvidia’s GPUs are present in 80 percent of computers on which powerful generative AI run.

The applications for generative AI are far ranging allowing for self-driving cars, voice assistants on smart devices and even giving the ability to predict the properties of new drugs to doctors or for farmers to spray weeds but not crops. The new uses for the chips Nvidia has created are seemingly endless at this moment.

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The reason why Nvidia has raised its stock price so much on Nasdaq

While many of the afore-mentioned applications have been around in recent years, the recent surge of new AI apps has been driving the rocket engine thrusting Nvidia into the orbit of companies like Alphabet, Amazon, Apple and Microsoft. The company briefly topped a valuation of $1 trillion, but it is expected it can rise there again with the ongoing AI boom and go even higher.

The rise in Nvidia’s stock price, traded on the Nasdaq Composite, was thrown into hyperdrive after it released its second quarter revenue forecast last week. Nvidia said it was boosting supply to meet demand for its AI chips which would bring in over 50 percent more revenue than Wall Street had predicted. The highest forecast valuation of the company puts it on par with Alphabet at roughly $1.6 trillion.