Why are AI chip stocks soaring? Is the rally sustainable?

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Experts agree that demand for generative AI will only grow in the years to come.

The shares began trading at around US$397 apiece on Wednesday, giving it a market valuation of US$988.7bil .

Demand for the chips was triggered by the viral success of ChatGPT, a generative AI chatbot that can understand the context of complex queries and generate coherent answers in a conversational, human-like manner. Nvidia’s share price rally has lifted other AI semiconductor stocks, such as Advanced Micro Devices and Marvell Technology, which are up by 92% and 75% respectively since the start of the year.

“Generative AI is a big improvement for AI as a whole as it can be used across industries,” he said, adding that over the longer term, it will transform content generation functions and that companies could develop their own generative AI models to raise efficiency.

 

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