The pivotal innovation propelled Nvidia from a relatively obscure chip manufacturer, primarily recognized for its video game graphics chips, into a leading figure in AI technology. This shift occurred as its distinctive chipsets became crucial for supporting the technology behind the AI surge.

With OpenAI alongside established tech giants like Microsoft, Google, Amazon, and Meta Platforms (the parent company of Facebook) increasingly purchasing Nvidia’s chips, the company’s annual revenue skyrocketed from $27 billion in 2022 to an anticipated $208 billion this year.

This rapid growth has driven a tenfold increase in Nvidia’s market capitalization, which now exceeds $4.5 trillion. This valuation surpasses that of Apple, Microsoft, and Alphabet, Google’s parent company, which are each valued between $3 trillion and $4 trillion.

“Calling this the most significant stock globally is an understatement,” remarked Jay Woods, chief market strategist at Freedom Capital Markets, highlighting Nvidia’s prominence.

Nvidia’s impressive market valuation rise reflects its consistent ability to exceed investor expectations. Its quarterly reports are filled with figures that surpass analyst predictions, complemented by optimistic projections from CEO Jensen Huang. Despite challenges, such as the trade tensions initiated during President Donald Trump’s administration, Huang suggests the company is merely at the beginning of a growth phase expected to extend for another decade.

But in the past few weeks, more investors are starting to wonder if the AI craze has been overblown, even as big tech companies such as Alphabet increase their budgets for building more AI factories.

That’s why Nvidia’s market value has fallen by more than 10 per cent — a reversal known as a correction in investors’ parlance — just three weeks after it became the first company to be valued at $US5 trillion.

“Skepticism is the highest now than anytime over the last few years,” said Nancy Tengler, chief executive of money management Laffer Tengler Investments.

Despite the recent worries, it’s widely assumed that Nvidia’s quarterly numbers will at least mirror the analyst forecasts that steer investor reactions.

The Santa Clara, California, company is expected to earn $US1.26 per share on revenue of $US54.9 billion, which would be a 59 per cent increase from the same time last year.

But the bar has been raised so high for Nvidia and AI that the company will likely have to deliver even more robust growth to ease the bubble worries.

Investors also are likely to be parsing Huang’s remarks about the past quarter and the current market conditions — an assessment that has become akin to the State of the Union for the AI boom.

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