• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Editor's Pick Why everyone is suddenly talking about Nvidia, the nearly $3 trillion-dollar company fueling the AI revolution
Editor's Pick

Why everyone is suddenly talking about Nvidia, the nearly $3 trillion-dollar company fueling the AI revolution

by May 30, 2024
by May 30, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

The business world is increasingly banking on artificial intelligence to be the next big thing, and has found itself turning to one maker of computer chips in particular — Nvidia — to power the revolution.

On Tuesday, Nvidia shares were up another 5%, leading the Nasdaq stock index, which represents technology firms, to a new all-time high. Over the past 12 months, Nvidia shares are up some 180%.

What makes Nvidia so special?

Founded in 1993 — famously, over a meal at Denny’s — Nvidia designs a special kind of programmable computer chip.

For decades, Intel and Advanced Micro Devices had dominated the U.S. chip sector.

But those companies specialized in producing CPUs — central processing units, which serve as the foundation for basic computing and software processes.

Nvidia, meanwhile, specialized in graphics processing units (GPUs). As their name suggests, GPUs are better able to render images, which meant that they were first associated with video and computer games.

But it turns out GPUs are also able to perform calculations concurrently in a way that regular CPUs cannot — making them more energy efficient and better able to handle sophisticated computing demands.

Over time, the other big chip makers began manufacturing their own GPUs to compete — but Nvidia, having enjoyed a first-mover advantage in the space, was where companies began to turn to for GPU needs.

It combined its chips with a suite of accompanying software that programmers simply preferred. Plus, its supply chain allowed it to produce GPUs in larger volumes, faster, and more reliably, than its rivals.

For instance, auto companies began turning to Nvidia chips for use in driver-assistance software that must process image information from sensors.

Nvidia hardware is now found in all Tesla vehicles.

Still, until 2020, Intel was a larger company by market capitalization than Nvidia.

Pandemic surge turns into AI revolution

During the pandemic, the shift to remote work and subsequent demand for data centers that could enable cloud-based computing — plus even more interest in video games while everyone was stuck indoors — accelerated Nvidia’s revenues even further.

Then Silicon Valley, led by OpenAI, began to realize the potential of artificial intelligence to transform how all companies do business.

The Nvidia ecosystem, from its software to its sourcing of materials, allowed it to position itself as the go-to source for companies that needed massive computing power to handle their AI needs.

Nvidia’s fortunes have since gone stratospheric: Today, it is worth nearly $3 trillion according to its current stock price — nearly as much as Apple.

Company co-founder and CEO Jensen Huang acknowledged in an interview with CNBC last year that a combination of luck and skill has led to the company’s success.

“We just believed that someday something new would happen, and the rest of it requires some serendipity,” Huang said. “It wasn’t foresight. The foresight was accelerated computing.”

Today, virtually every major tech company, including Amazon, Google, Meta, Microsoft and Oracle, has made use of Nvidia chips.

Bloomberg News has called Nvidia’s chips the “workhorse for training AI models,” and PNC Financial Services Group analyst Amanda Agati described Nvidia’s lead in the category last fall, based on its valuation, as a “quasi monopoly.”

For Moody’s Senior Vice President Raj Joshi, Nvidia represents the “dominant” infrastructure player behind the current rise of the AI sector.

While other chip designers continue to work to catch up to Nvidia, the company’s three decades’ worth of GPU specialization — represents a massive advantage, he said.

“This emerging field [AI] is better supported by GPUs,” Joshi said in an interview with NBC News, adding: “Nvidia is providing the foundation for it in most cases.”

Nvidia also offers solutions for other sectors, like health care, that are not specifically tech-oriented, Joshi said.

“They have a big lead in these markets,” he said.

Nvidia’s specialization means it is able to charge a premium for its products. In fact, its chips, which are manufactured in Taiwan, are so unique that companies looking to build AI capabilities are complaining that there is a shortage of them.

While the Biden administration’s 2022 CHIPS and Science Act is designed to spur development of GPUs — and do so on U.S. shores — there is already concern about keeping up with market forces.

“The volume of chips that [AI companies] project they need is mind-boggling,” U.S. Commerce Secretary Gina Raimondo said this week. She suggested even more federal subsidies would be needed if the U.S. hoped to be a meaningful player in chip manufacturing.

“I suspect there will have to be — whether you call it ‘CHIPS Two’ or something else — continued investment if we want to lead the world,” Raimondo said during a virtual appearance at an Intel event. “We fell pretty far. We took our eye off the ball.”

In the meantime, investor interest in Nvidia remains frenzied. While some have speculated that its success could be a bubble, many Wall Street analysts say its financial statements have been proof that its product is viable.

“The health of their core data center business is genuinely stunning,” Goldman Sachs’ Tony Pasquariello wrote in a note to clients Friday.

Because it is now so much more valuable, Nvidia’s financial results carry greater weight for major stock indices, acording to Agati, who is chief investment officer and managing executive for investments at PNC.

In other words as Nvidia goes, so goes the stock market.

“[Nvidia] has become critical to the market’s path forward,” Agati said in an email to NBC News, adding: “In the saying ‘data is the new oil,’ Nvidia continues to prove it is in a league of its own.”

This post appeared first on NBC NEWS
You Might Also Like
  • MSNBC President Rashida Jones steps down after four-year tenure
  • Bitcoin prices hit all-time high, soaring to nearly $69,000
  • Peacock raising prices by $2 ahead of the Summer Olympics as streaming wars rage on
  • Hiring stays strong for low earners — while job growth for middle- and high-earners slows, Vanguard finds
Share
0
FacebookTwitterPinterestWhatsapp

previous post
McDonald’s might never expand CosMc’s. But the spinoff could still pay dividends.
next post
Weekly mortgage demand drops to three-month low as rates begin climbing again

You may also like

Home Depot says the worst of inflation is over —...

November 15, 2023

Hasbro forecasts as much as $300 million impact if China...

April 25, 2025

New Starbucks CEO Brian Niccol commits to working with union...

September 26, 2024

Last-minute summer travelers are finding the best deals in years

August 12, 2024

Red Lobster files for bankruptcy, but restaurants will stay open

May 21, 2024

Orange juice prices are going through the roof — forcing...

May 31, 2024

Frustrated pharmacists could go on strike in rare protest

October 29, 2023

Judge blocks Albertsons-Kroger $25 billion supermarket merger

December 11, 2024

Macy’s turnaround hinges on revamping some stores and closing others....

March 7, 2025

Chick-fil-A is releasing its own entertainment app, with family-friendly shows...

October 21, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025
    • Nvidia results spark global chip rally

      May 30, 2025
    • Boeing to resume airplane deliveries to China next month, ramp up Max production, CEO says

      May 29, 2025
    • Nuclear Power Trio: OKLO, SMR, and CCJ in Focus

      May 29, 2025
    • Analyzing SIL, USO, and NVDA: Could These Bullish Patterns Trigger?

      May 29, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,764 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,470 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,450 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,430 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,307 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,105)
    • Investing (538)
    • Stock (2,578)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’...

      May 30, 2025
    • Nvidia results spark global chip rally

      May 30, 2025
    • Boeing to resume airplane deliveries to China next month, ramp...

      May 29, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,105)
    • Investing (538)
    • Stock (2,578)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Polls say older voters want Social...

    June 24, 2024

    Google employees pressure costumed execs at...

    November 1, 2024

    Home buyers to be spared automatic...

    March 16, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here