Nvidia's $1 trillion feat captures AI's rise America's boardrooms and earnings calls

Experts say, from 2023 to 2030, the AI market will expand at a compound annual growth rate of 37.3 percent

Chipmaker Nvidia's surge to a trillion-dollar market value on May 30 has meant that the chipmaker is now the fifth most valuable American company behind Apple, Microsoft, Alphabet and Amazon. Wall Street is re-evaluating the potential for the chipmaker from an artificial intelligence (AI) boom, thus taking Nvidia’s share is up almost 110 percent this year.

The emerging relevance of all things AI has very quickly seeped into the boardrooms and earnings calls. A record 110 of the S&P 500 companies mentioned the term “AI” during their earnings call for the first quarter, as per FactSet. In 2022, consultancy PwC estimated that AI could contribute $15.7 trillion to the global economy by 2030, almost equivalent to the gross domestic product of China.

Market participants are of the view that by 2030, the AI market will expand at a compound annual growth rate (CAGR) of 37.3 percent. By 2030, the sector may command a value of $1.81 trillion, according to a report cited in Business Insider.

Microsoft Corp and Alphabet Inc-controlled Google, two of the mega players in the technology space, believe that generative AI can change how work is done. They have added the technology to their search engines and productivity software as they want to dominate the industry.

“The rally in AI-related companies in particular has raised concerns that this segment is now in a bubble,” the London-based Financial Times quoted Mark Haefele, chief investment officer at UBS Global Wealth Management, as saying. At the same time, “we don’t see the AI-related rally as unsustainable”.

In January, Cathie Wood’s flagship ARK Innovation ETF lowered its holding in Nvidia and missed out on most of the meteoric rise in chipmaker's shares that added more than half a trillion dollars in market value.

Citing concerns over the computer-chip industry’s boom-bust cycle, Woods earlier this week mentioned in a tweet that it is “priced ahead of the curve.” However, Woods is betting on software stocks that she expects to grow in to the size of Nvidia, highlighting UiPath Inc., Twilio Inc. and Teladoc Health Inc. as key examples. Her funds hold all three stocks.

Since ChatGPT was launched in November, investors are betting that generative AI will supercharge swaths of the tech industry and usher in groundbreaking applications. Nvidia’s valuation briefly crossed $1 trillion after the world’s biggest maker of the specialized AI chips gave a prediction that surpassed expectations.