Is Nvidia a bubble or is the hype around AI justified? The answer to both questions is a resounding “yes”.

It’s happening – friends and family I haven’t heard from in ages are coming out of the woodwork asking me if it’s too late to buy Nvidia stock. Is the bubble about to pop?

President and CEO of Nvidia Corporation Jensen Huang.Credit: AP

In case you’ve been living under a rock, Nvidia is the company selling the microchip picks and shovels in an artificial intelligence gold rush that has captured Wall Street. You can’t spell Nvidia without “AI”.

When Nvidia reported earnings last month, the stock rocketed through $US1000 ($1500) for the first time. It was only in January that share hit $US500, two weeks later it’s now $US1200, that’s a 150 per cent return year to date.

On that single day, Nvidia added $US221 billion to its market capitalisation, one-and-a-half BHPs, to achieve the second-largest single day valuation increase in history after – you guessed it – Nvidia’s $US276 billion February’s earnings jump.

Now valued at $US3 trillion, it’s the second-largest company on earth after Microsoft, neck and neck with Apple. It’s larger than Tesla and Amazon combined, more than the entire Australian share market and more than 20 Commonwealth Banks.

The enormous rise in share price has prompted Nvidia to announce a 10-to-1 “stock split”, scheduled for Monday,........

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