An already great year for the Nvidia Corporation (NASDAQ: NVDA) got a lot better overnight.

With their stock up 26% over the last 24 hours (at the time of this writing), the California-based hardware and software company is now up 168% on the year.

Now sitting at their all-time high, many are wondering just how high Nvidia can go.

Their YTD growth suggests this might be the beginning of something even bigger…

But first, what happened yesterday that led to a 25% bump in pre-market trading?

After Wednesday’s closing bell rang, Nvidia reported on their Q1 earnings. And they were impressive.

The chip giant reported revenue of $7.2 billion, versus analyst projections of $6.5 billion.

They easily surpassed expectations in both their gaming and data center sales.

On top of that, Nvidia claims they expect $11 billion in revenue for Q2.

In 2022, many were concerned about Nvidia’s long term outlook, as sales for GPUs used primarily for gaming slowed dramatically.

However their improved performance in sales to data centers have more than made up for that deficit.

Their (not so) secret to success is the same thing that’s driving most of tech, and even the whole S&P 500…

It’s Always AI

There’s no question, Nvidia is getting fat off of artificial intelligence.

As is their competitor, Advanced Micro Devices (NASDAQ: AMD), who are up 86% YTD.

But nobody has positioned themselves better for the AI Gold Rush than Nvidia, with the development of their advanced GPU, the H100, which is designed specifically for resource-intensive AI applications.

The market for AI software and hardware is already immense, and growing fast.

During yesterday’s earnings call, CEO Jensen Huang said…

"We're seeing incredible orders to retool the world's data centers. And so I think you're seeing the beginning of, call it, a 10-year transition to basically recycle or reclaim the world's data centers and build it out as accelerated computing. You'll have a pretty dramatic shift in the spend of a data center from traditional computing and to accelerate computing with SmartNICs, smart switches, of course GPUs and the workload is going to be predominantly generative AI."

Putting that into the context of how much money is up for grabs, Huang added…

“A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process."

The sky seems to be the limit when it comes to AI.

Nvidia has already cornered large parts of the market, with its H100’s (which sell for as much as $40,000 on the secondary market) being used to power the AI efforts of Google, Microsoft, and OpenAI.

How much business is Nvidia getting off of these companies?

Imagine, just one of Google’s A3 supercomputers uses eight of Nvidia’s high end processors…

Nvidia’s lofty rest-of-year projections seem to rely only on if they can make their GPUs fast enough.

As for Nvidia’s huge day today, if their gains hold, their market value increase of $200 billion would set the record for the largest single-day increase in history.

With that, let us know your thoughts. Did you see Nvidia’s huge earnings report coming? Is the AI demand going to continue to grow, or is it just a fad? Can Nvidia’s competition keep up? Share your thoughts about this, or anything at feedback@technologyprofits.com.