- Nvidia stock traded above $1,100 for the first time ever on Tuesday, surpassing its previous record closing high, thanks to Elon Musk’s AI startup xAI raising $6 billion in funding
- Nvidia reported stellar first-quarter results, with adjusted earnings surging 461% year-over-year and revenue growing 262%, driven by strong demand for AI training
- Nvidia announced a 10-for-1 stock split and an increase to its cash dividend, following the footsteps of other tech giants in recent quarters
Nvidia’s stock price has reached unprecedented levels, propelled higher by increased investment in artificial intelligence technology. The semiconductor company’s shares closed above $1,140 on Tuesday, surpassing previous record highs.
Musk’s AI Startup Picks Nvidia for New Supercomputer
The stock’s latest surge comes after AI startup xAI, founded by Elon Musk, announced plans to build a new supercomputer powered by Nvidia’s graphics processing unit (GPU) chips. xAI revealed Sunday that it raised $6 billion in Series B funding, sending Nvidia shares up 8% the next day.
According to the Information, Musk intends to use Nvidia chips for xAI’s “Gigafactory of Compute,” a supercomputer that will run the startup’s conversational AI bot named Grok. This represents a major vote of confidence for Nvidia’s technology.
Nvidia Posts Record Q1 Results, Announces Stock Split
Nvidia’s first quarter financial results, reported last week, impressed Wall Street. The company’s adjusted earnings soared 461% compared to a year ago, while revenue grew 262%.
Alongside the strong earnings report, Nvidia announced a 4-for-1 stock split to make shares more accessible. The company also increased its quarterly dividend payment, following the lead of other major tech firms.
Data Center Revenue Drives Growth
Nvidia’s data center segment was the primary engine of its growth in Q1, with revenue rising 427% to a record $22.6 billion. Data center sales accounted for 86% of the company’s total revenue.
In an interview after earnings, CEO Jensen Huang said Nvidia is seeing “strong and accelerating demand” for AI model training in its data center business. He expressed confidence this demand will continue despite concerns of an economic slowdown.
AI Investment Fuels Long-Term Optimism
The surge of investment in artificial intelligence, exemplified by xAI’s new supercomputer plans, has boosted optimism for Nvidia’s long-term prospects. As a leading provider of AI hardware, Nvidia is poised to benefit as more companies deploy AI technology.
With strong near-term demand trends and a long runway for growth from AI adoption, Nvidia’s record rally could have further to run. However, the stock’s elevated valuation leaves little room for disappointment.
