Nvidia (NVDA) became the first chipmaker to ever hit a $1 trillion market valuation on Tuesday, before dipping back below the threshold. Nvidia's stock rose more than 5% during the session, but gave back some of those gains in the afternoon. The stock closed at $401.11, giving the company a market cap of $992 billion.

The Santa Clara, Calif.-based chipmaker became the ninth public company to ever hit the $1 trillion level earlier in the session, joining the ranks of tech giants such as Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), and Apple (AAPL).

On Monday, Nvidia took the wraps off a slew of new AI-centric products, including a new high-powered supercomputer and a platform that will put generative AI to work in video game development.

Nvidia shares have seen a stunning rally this year — up more than 165% since the start of 2023. The chipmaker is at the center of an AI craze thanks to its high-powered graphics cards and server products.

""It's something that they have earned," KeyBanc Capital Markets Equity Research Analyst John Vinh told Yahoo Finance Live on Tuesday. "What we've seen with their most recent earnings results is probably one of the biggest beats in the tech industry seen in probably over a decade."

Shares skyrocketed more than 26% last Thursday following Nvidia's better-than-expected quarterly results and guidance.

“There’s a war going on out there in AI, and Nvidia today is the only arms dealer out there. So as a result we’re seeing this huge jump in revenues,” Raymond James managing director Srini Pajjuri recently said in a note to investors.

The company says it expects revenue of $11 billion, plus or minus 2% for the second quarter. Wall Street was looking for $7.2 billion.

“We thought if they beat the guidance by about 5%, that’s good enough for the stock to stay where it is. But they’re beating [the] guidance consensus by 50%,” said Pajjuri.

Analysts are overwhelmingly bullish on the stock, with 49 buy recommendations, 8 holds, and 1 sell. The average price target on the stock is $439.73.

Ark Invest founder Cathie Wood tweeted on Monday that the AI darling is now overpriced.

"Since 2014, @ARKInvest has believed that Nvidia saw the AI future before most other chip companies, and now we believe it will continue to power the AI age. At 25X expected revenue for this year, however, $NVDA is priced ahead of the curve," Wood tweeted.

Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre

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