AI has taken the world by storm in 2023, and the latest earnings report from chipmaker Nvidia (NVDA) reveals that it’s more than just hype.

On Aug. 23, Nvidia reported that its second-quarter revenue doubled to $13.51 billion, shattering Wall Street’s expectations of $11.22 billion.

The company told investors that revenue would grow again in Q3 to reach $16 billion. Nvidia’s net profits surged to $6.19 billion, up from just $656 million a year earlier.

NVDA stock jumped in after-hours trading, rising nearly 7% to $502.15. Earlier in the day, the stock had closed New York trading at $471.16.

The time gap between the New York close and the after-hours market was only about three hours. But that was enough time for NVDA stock to add tens of billions of dollars to its valuation.

America’s fifth $1 trillion company

Nvidia rode the AI boom to become just the fifth U.S. company to reach $1 trillion in valuation.

You can think of valuation as a company’s current stock price multiplied by the number of outstanding shares.

In terms of valuation, only Apple (AAPL), Microsoft (MSFT), Google-parent Alphabet (GOOGL) and Amazon (AMZN) are bigger.

Although Nivida produces chips for all sorts of products, it was AI specifically that drove the latest earnings upshot.

Most of the company’s growth was driven by its data center business—which includes the A100 and H100 AI chips This segment accounted for over 75% (or $10.32 billion) of its quarterly revenue.

These are essential for building AI applications like ChatGPT.

But it’s not just language models like ChatGPT that are driving demand for AI. Governments and businesses are racing to get ahold of AI chips to fuel their next creations.

AI boom: ChatGPT is just the start

AI has been around as an academic discipline since the 1950s, but only recently has the technology found real-world use cases.

Today, AI is being used in healthcare, e-commerce, food tech, banking and financial services, logistics and transportation and the automotive sector.

AI can be used in many industries that normally require human intelligence. It replaces human labor with powerful computer systems and algorithms equipped with visual perception, speech recognition and decision-making abilities.

As the race to consume powerful AI chips continues to grow, industry research predicts that the artificial intelligence market could reach $1.3 trillion by 2032.

In other words, ChatGPT is just the tipping point.

For companies like Nvidia, this is both a blessing and a curse.

As the U.S.-China quarrel disrupts global supply chains, Nvidia has a hard time filling the massive demand for chips.

Last fall, the Biden administration blacklisted Chinese chipmakers from international trade and told U.S. chipmakers not to sell to China.

Concerns about a supply crunch even showed up in Microsoft’s annual report. For the first time, the report identified a lack of AI chips as a potential risk factor for investors.

But the risk isn’t just limited to investors.

Businesses won’t be able to source the goods they need for their AI tools and products.

This means fewer innovations and products for users who rely on AI to speed up their work.

All said, Nvidia is set to have a record-breaking year on the back of AI.