Why Wall Street’s obsession with a Silicon Valley company most people never heard of is sending stocks surging

New York — The stock market has boomed this year, and one big reason is a company without much name recognition — unless you’re a hard core video gamer.

Nvidia (NVDA) has surged 222% this year, including a 3% bump Thursday following super impressive earnings. Although it’s been known for graphics processors, Nvidia has now become almost synonymous with AI, after successfully diving head-first into the production of the type of microchip that powers the promising technology.

Demand has outpaced supply, making Nvidia the hottest of hot stocks: It’s leading the S&P 500 this year by a mile, and is now one of only a handful of companies with a market capitalization of more than $1 trillion.

Investor enthusiasm for AI has also helped boost other tech stocks. Meta is up 144% this year, and the tech-heavy Nasdaq has grown 31%. But Nvidia is by far the most sought-after AI stock. The American chipmaker produces the building blocks of generative artificial intelligence (think ChatGPT and the like).

The Santa Clara based company posted year-over-year sales growth of 101% in the second quarter. Revenue went from $6.7 billion in the second quarter last year to $13.5 billion this year. The results were even stronger than the $11.2 billion in revenue that Wall Street analysts expected.

This is the second time in a row that Nvidia’s quarterly earnings have blown past expectations. Its success is beginning to provide assurances that the AI gold rush is not just a flash in the pan.

AI enthusiasm has helped power stocks into a bull market, even as the Federal Reserve has continued to hike interest rates in its battle against inflation.