Nvidia Corp on Tuesday became the first chipmaker to hit a trillion-dollar market value, as the company bets on a surge in demand for its AI chips that power chatbot sensation ChatGPT and many other applications.

The gaming and AI chip maker’s shares rose as much as 7.7% to a record high of $419.38 in early trading, adding to sharp gains from last week and lifting stocks of chipmakers and other AI companies.

The latest surge in Nvidia’s shares that powered the company past the trillion-dollar mark followed its revenue forecast last week that surpassed estimates by more than 50%, a feat that Wall Street analysts called “unfathomable” and “cosmological”.

By comparison, the next largest chipmaker globally – Taiwan Semiconductor Manufacturing Co Ltd - is valued at about $535 billion.

The meteoric rise in Nvidia’s shares in the past week has pushed its valuation past its peers and prompted analysts to raise their price targets on the stock.

The highest price target values the company at about $1.6 trillion, on par with Google-parent Alphabet.

Nvidia’s forward price-to-earnings multiple (P/E), a common benchmark for valuing stocks, is 47.49 – significantly above that of peers Qualcomm and Intel and also above the sector median of 18.09, according to Refinitiv data.

Despite the sky-high valuation, analysts believe Nvidia’s AI chips business has room for growth as generative AI technology is still at a nascent stage with wide adoption expected in the years to come.

“While the company’s valuation looks lofty at the moment, we think Nvidia has the earnings firepower as the adoption of its AI GPU remains in the very early innings,” Kinngai Chan, senior research analyst at Summit Insights Group, said.

Led by Jensen Huang, Nvidia, a powerhouse in videogame chips, pivoted to the data center market over the last few years.

The company’s business rapidly expanded during the pandemic when gaming took off, cloud adoption surged and crypto enthusiasts turned to its chips for mining coins. Huang’s bets on AI is expected to fuel growth in the coming months.

OpenAI-owned ChatGPT’s rapid success has prompted tech giants such as Alphabet and Microsoft to make the most of generative AI, which can engage in human-like conversation and craft everything from jokes to poetry.

Nvidia joins an elite group comprising Apple Inc, Alphabet Inc, Microsoft Corp and Amazon.com Inc.

Nvidia’s shares rose about 25% last week sparking a rally in AI-related stocks and boosted other chipmakers, helping the Philadelphia SE Semiconductor index close on Friday at its highest in over a year.

“Technical traders and AI mania have pushed Nvidia toward the $1 trillion cap and it is not inexpensive,” said Jim Kelleher, analyst at Argus Research.