Nvidia becomes first company to reach $5 trillion valuation, fueled by AI boom

Shares of Nvidia rose more than 4% Wednesday, making the tech giant the first company to cross the $5 trillion market value threshold.

The extraordinary milestone reflects a remarkable rise for the company, which has evolved from a niche video game processor to an integral player in the artificial intelligence boom.

Nvidia’s stock, which closed up 5% Tuesday, has climbed more than 50% year-to-date.

The latest move higher comes shortly after CEO Jensen Huang said Nvidia expects $500 billion in AI chip orders and announced plans to build seven new supercomputers for the U.S. government.

Separately, Nvidia announced on Tuesday that it is taking a $1 billion stake in Nokia, forming a strategic partnership with the networking company to develop next-generation 6G cellular technology.

U.S. stocks, fueled by the AI trade, climbed to record highs on Tuesday. The major averages were boosted by gains in tech, with Apple and Microsoft both reaching a market value of more than $4 trillion after their shares rose.

The dizzying rally for U.S. stocks comes despite lingering concerns over a bubble, particularly as AI-driven spending has led to record deals and valuations.

Earlier in the month, the International Monetary Fund and Bank of England became the latest financial institutions to warn that global stock markets could be in trouble if investor appetite for AI turns sour.

Ark Invest CEO Cathie Wood on Tuesday flagged the near-term possibility of a “reality check” on AI valuations — but pushed back on fears of an AI bubble.

“If our expectations for AI … are correct, we are at the very beginning of a technology revolution,” Wood told CNBC on the sidelines of Saudi Arabia’s Future Investment Initiative (FII) in Riyadh.