Nvidia’s massive sales prediction on Thursday gave investors more faith in the AI-driven surge in chip demand, and the company’s gains lifted shares of the semiconductor industry. Nvidia’s gain was 9%.

In the lead-up to its reports, Nvidia’s shares were trading close to all-time highs, raising expectations. The outcomes also marked the end of a successful quarter for Microsoft and other large US IT companies, with AI emerging as a key growth engine.

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

In addition, the business announced a 10-for-one stock split on Wednesday and increased its quarterly dividend by 150% because to the ongoing demand for its high-end processors, which are the basis for almost all AI applications, including ChatGPT from OpenAI.

Nvidia, which was already the third most valuable company in the world, was expected to increase its market value of $2.335 trillion by $210 billion. The company’s stock has increased by more than 90% this year after more than doubling in 2023. If its shares close above $1,000, it would be a significant milestone.

The increase on Thursday also came after Taiwanese contract chipmaker TSMC, a significant Nvidia supplier, predicted that the global semiconductor market will rise by 10% annually, excluding memory chips.

While other AI-focused semiconductor firms including Advanced Micro Devices, Arm, Broadcom, and Super Micro Computer climbed between 2.2% and 9.2%, TSMC’s U.S.-listed shares were trading 1.9% higher.

Experts applauded Nvidia officials’ comments that the company’s new Blackwell AI chips will begin selling this quarter and that demand for the processors would outpace supply “well into next year.”

CEO Jensen Huang told Reuters he anticipated more demand for Nvidia’s chips as a result of emerging AI models that can produce videos and have conversations with human-like voices.

“With competition years behind, we believe Nvidia can comfortably defend and maintain its market share,” said Ido Caspi, a research analyst at Global X, a company that owns Nvidia shares.

“The ongoing Hopper (Nvidia’s current chips) demand should help alleviate investor concerns about customers potentially delaying purchases in anticipation of the Blackwell transition.”

Additionally, analysts predicted that Nvidia’s stock split will increase its attractiveness to individual investors following a drop in interest this year.

(Adapted from EconomicTimes.com)