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What Factors Contributed to Nvidia’s Astonishing Rise as Top-Tier Global Corporation?

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A company that makes computer chips for video games has become very powerful and influential using artificial intelligence.  Now it’s getting close to one trillion dollars.

With the booming field of artificial intelligence, Nvidia has become one of the world’s most valuable companies.

This company makes chips that can run video games with advanced graphics for a long time. Researchers in artificial intelligence started using these chips a few years ago, leading to significant advances in the field.

The Rise of Nvidia’s Value: What Are Key Contributors Amidst AI Frenzy?

As the tech industry rushes to develop new AI advancements, the company announced its earnings this week. The company’s value increased dramatically in just one day, possibly making it the largest ever.

Nvidia’s stock price increased by 24%, making the company’s total value reach $939.3 billion. This surpasses the value of Tesla and Facebook, worth $584.7 billion and $647.6 billion, respectively. Nvidia now ranks just below Apple, Google, Microsoft, Amazon, and Saudi Aramco, the world’s most valuable companies.

Nvidia’s Journey: From Visual Processing Pioneers to AI Powerhouse?

A trio of computer chip engineers founded Nvidia in 1993 to meet the growing need for better computer visual processing. Early in the 2000s, they made chips for Microsoft’s Xbox. Nvidia continued to experience significant growth as the video game market grew rapidly and outgrew film, television, and music.

In recent years, the demand for Nvidia’s graphics processing units (GPU chips) has risen from both big tech companies and startups. However, this demand isn’t for traditional reasons but for their exceptional ability to process a lot of data for advanced AI programs like Google’s PaLM 2 and OpenAI’s GPT4. Recently, Nvidia’s AI business has grown steadily, but in the last six months, it’s seen unprecedented interest and investment, boosting its sales by a lot.

Greg Osuri, the founder of Akash Networks, says large memory chips are essential for training AI models. Nvidia is the sole producer of such chips, making them the go-to company. “Nvidia happens to be the only company that makes those chips.” in Osuri’s statement.

 The race for Nvidia’s GPUs is on among start-ups and big tech companies. During the Newcomer AI meeting in March, David Luan, creator of AI start-up Adept Labs and former Google engineer, said once an AI company establishes its business model, it needs venture capital funding before it can start investing and partnering with Nvidia, specifically Jensen Huang. AI companies looking to succeed in the industry must secure funding and build relationships with Nvidia’s CEO, Luan says. 

According to Greg Osuri, a set of eight of the most advanced chips can cost $300,000. Companies often purchase thousands of these chips. Elon Musk, the owner of Twitter, recently acquired approximately 10,000 GPUs as he intends to establish his own AI company, as reported by Insider.

Tech Giants in Pursuit: The Race for Rival Chips

OpenAI introduced ChatGPT in November, a chatbot that can engage in complex conversations, ace licensing exams, and write code. The launch demonstrated the technology’s potential, triggering a race between AI developers. In the field of artificial intelligence, ChatGPT sparked intense competition.

Colette Kress, Nvidia’s Chief Financial Officer, referred to ChatGPT’s launch as the technology’s “iPhone moment.” This was when the world realized how powerful this new technology could be. In his statement, Kress emphasized ChatGPT’s significant impact and transformative nature.

“The technology came together and helped everybody realize what an amazing product it can be and what capabilities it can have,” Kress said.

The booming AI industry has contributed greatly to Nvidia’s stock’s rise this year. On Wednesday, the company said second-quarter sales would reach $11 billion. This is a big deal compared to Wall Street analysts’ predictions of $7 billion. Nvidia’s performance demonstrated its market dominance and remarkable growth.

The numbers “blew everyone away,” stated an analyst, CJ Muse, with Evercore Inc. “No one saw that.”

Tech companies are trying to develop their own rival chips, as Apple did for years, to reduce reliance on external suppliers and costs. Microsoft and Amazon have also started designing their own chips. Google has been using its own “Tensor Processing Units” for years. This shows that these companies want more control over their chip technology and rely less on external providers.

Still, the alternatives won’t be sufficient for the top companies, Muse said. “I think Nvidia’s dominance will continue.”

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