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(Tech stock columnist Jon D. Markman publishes Strategic Advantage, a lively guide to investing in the digital transformation of business and society. Click here for a trial.)

Nvidia (NVDA) reported blow-out earnings Wednesday after the close. Revenues are surging as its high-end chips for graphics and data centers remain in high demand.

The San Jose, Calif.-based company reported revenues surged 68% during the second quarter, versus a year ago. And for good measure executives raised Q3 guidance to $6.8 billion, $300 million above prior estimates.

Shares are likely to trade much higher the remainder of 2021.

It should not be a surprise business is booming. Nvidia is one of the best-run semiconductor companies in the world. Long ago, Jensen Huang, chief executive officer began moving the company all-in on artificial intelligence. It was the kind of big bet that could have sunk the business. At the time AI was more about theory than practical applications. The wager paid off.

Today Nvidia has become an AI business.

It runs an AI software platform called CUDA. Its chips for computer graphics use the software to render best-in-class graphics for gaming computers, workstations, supercomputers, data centers, and even game consoles like the Nintendo Switch.

However, the real engine of growth is future applications.

AI researchers have only begun to scratch the surface of what is possible with hardware and software capable of processing tens of millions of simulations on a timely basis.

That’s the Nvidia value proposition. It is why shares trade at 24x sales and 44x forward earnings.

The valuation is hard for many investors to get their head around yet it is the product of Huang constantly putting Nvidia in the right place at the right time. Now the company is growing extremely fast as AI goes mainstream.

Gaming sales surged to $3.1 billion in Q2, up 87% year-over-year. Compute and Network sales, which includes data centers, bounced 46% higher over the same time frame to $2.6 billion.

At a current share price of $190.40, Nvidia still seems inexpensive. Longer-term investors should buy shares into weakness.