What happened
Nvidia (NVDA 0.76%) shares have soared by more than 60% so far in 2023, and a meaningful portion of those gains came this week. Shares of the semiconductor giant were holding on to a weekly gain of about 9% in early trading Friday, according to data provided by S&P Global Market Intelligence. That move comes despite the Nasdaq Composite index moving in the opposite direction and having dropped over 3% since last Friday's close.
So what
Nvidia's recent move higher came as investors began to value the company's potential in a growing artificial intelligence (AI) sector. That recognition was sparked by the buzz surrounding the ChatGPT AI-powered chatbot system released late last year. Revenue from Nvidia's AI segment did get a boost in the fourth quarter, but still represented less than 5% of total sales. Company executives spent significant time discussing the growing potential for the product in the company's conference call for investors.
Image source: Getty Images.
But it wasn't just future potential that gave Nvidia shares a big boost this week. It was a recovery in the company's gaming segment, too. After two consecutive quarterly periods of declines in gaming product revenue, that segment's sales rose 16% sequentially.
Now what
The combination of near-term gains from gaming and the future potential for Nvidia's AI infrastructure gave the stock a big lift. Nvidia CEO Jensen Huang stirred excitement among investors as he focused on the future of artificial intelligence applications. Huang pointed out the impact of ChatGPT, saying, "The activity around the AI infrastructure ... has just gone through the roof in the last 60 days. And so there's no question that whatever our views are of this year as we enter the year [have] been fairly dramatically changed as a result of the last 60, 90 days."
It's clear the views of investors have also changed. The gaming segment recovery and the bright future for AI solutions led to this week's nearly double-digit gain in the stock.
