Why is Nvidia stock soaring?

Artificial intelligence applications are driving demand for computing power, in particular, language generating AI. Nvidia’s chips are being used to create AI tools. One AI system alone can use thousands of Nvidia chips which are essentially computing engines. The market’s adoption of ChatGPT is already resulting in a surge of chip orders.
While there are fears this is a one time sales acceleration, there is evidence to suggest that these sales could be sustainable as part of a long term trend. Big data centers are retooling their computers with AI. We are likely to see the global data center infrastructure industry transition towards generative AI throughout their businesses.
Nvidia is arguably the best positioned company to ride the wave of AI adoption. However, there are also fears Nvidia will not be able to supply the demand.
As we speak here at the end of May, Nvidia is closing in on a one trillion dollar market capitalization.
Nvidia does not manufacture the chips themselves, but contracts them to chip markers like Taiwan Semiconductor Manufacturing, TSMC.
Works Cited:
https://www.wsj.com/articles/nvidia-nvda-q1-earnings-report-2024-132e3559
https://www.wsj.com/articles/nvidia-shares-jump-as-chip-maker-approaches-1-trillion-valuation-7f8ccd68
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