Nvidia was long known for graphics cards. But now the company’s chips are playing a key role in artificial intelligence. This is driving Nvidia to a milestone that was once hardly imaginable.
The AI boom has made the chip company Nvidia the most valuable company on the stock market. Nvidia now has a market value of over $3.33 trillion, overtaking the software giant Microsoft. Nvidia plays a key role in applications using artificial intelligence (AI). The company’s chip systems are used to train AI software in data centers – and they are also increasingly being used to operate them. Rivals such as Intel or AMD have so far been unable to pose any noticeable competition to Nvidia in the market.
With its march to the top, Nvidia shares are the stocks with the best price performance in the past 25 years, according to Bloomberg’s calculations. Since the IPO in 1999, the value of the shares has risen by an incredible 591,078 percent, including reinvested dividends, according to Bloomberg figures. In other words, every dollar invested at the time has turned into more than 5,900.
Recently, it has been shown time and again that the demand for software with artificial intelligence is causing Nvidia’s business to grow explosively. In the last quarter alone, there was a year-on-year jump in sales of 262 percent to 26 billion dollars. At the same time, quarterly profit shot up from 2 to almost 15 billion dollars.
And 61-year-old company boss Jensen Huang, Nvidia co-founder and charismatic showman, promises that this is just the beginning of a computer revolution.
Stock exchange believes in Nvidia boss’s vision
Huang is convinced that in the future most content will no longer be retrieved from pre-made storage, but that AI software will generate it fresh based on the current situation. For example, it will be possible to talk to building technology via chatbot instead of looking at data somewhere else.
Nvidia is preparing for this future with a new generation of chips called Blackwell. With the current Grace Hopper system, for example, the chatbot ChatGPT could have been trained within three months with 8,000 Nvidia chips and a power consumption of 15 megawatts, said Huang. Blackwell can do this with 2,000 chips and 4 megawatts of power.
If Huang is right with his vision of the future, even more business for Nvidia would be the result. And investors’ belief in this is one of the drivers of the stock’s recent rise. The stock is currently worth around ten times more than it was in September 2022. Huang himself rose to 12th place in the Bloomberg ranking of the richest people in the world with an estimated fortune of $115 billion.
Nvidia also operates the “Omniverse” platform, which enables companies to better control their factories using so-called digital twins, and supplies Mercedes, among others, with car computers for driver assistance functions.
The basis for the success is the technology that Nvidia once developed for graphics cards. But later it became clear that the systems are much more efficient at training AI than classic processors. Nvidia was therefore lucky to have had the right technology at the right time.
AI also makes Microsoft and Apple shares popular
In the top group in terms of market value, alongside Nvidia and Microsoft, Apple is also one of the companies. The announcement of new AI functions last week caused a share price boost for the iPhone company. Meanwhile, Microsoft has been trying for years to bring artificial intelligence into its products through a multi-billion dollar pact with ChatGPT inventor OpenAI.
Nvidia is profiting from all of this and is selling thousands of expensive chip systems to Microsoft, Google and the Facebook group Meta, among others. The jump in Nvidia shares by a good 3.5 percent was preceded by the announcement of a cooperation with the computer group Hewlett Packard Enterprise for technology for AI use in companies. In after-hours trading, Nvidia shares rose by a further 0.6 percent.
The Silicon Valley website “The Information” also reported that Huang is now worried that major customers such as AWS and Microsoft are buying more Nvidia chip systems than can currently fit in their data centers. To avoid an oversupply on the market later, buyers must now prove that they have sufficient capacity for this.
After a slight decline in share price, Microsoft’s market value reached $3.317 trillion, while Apple’s market value was $3.286 trillion.
Source: Stern
