Nvidia multiplied its value by eight in less than two years and today, with a valuation of US$2.9 billioncompetes for the title of the most valuable company in the world along with Apple and Microsoft.
“Nvidia’s rise is partly due to a fortuitous event. Originally, the company specialized in designing graphics cards for video games.focusing on developing chips capable of handling multiple tasks simultaneously,” a Cohen report explains.
However, as time goes by, The market began to discover other uses for its chips, such as cryptocurrency mining and, above all, training artificial intelligence models.which formed a new source of demand and led the company to redefine its focus.
“This is how Nvidia gradually specialized in chips for artificial intelligence, consolidating a competitive advantage that laid the foundations for its current leadership in the segment,” the same report explains.
The launch of ChatGPT in November 2022 marked a turning point. The largest technology companies, which have already been developing artificial intelligence capabilities for years, were forced to accelerate their plans and launch products to the public to avoid a late entry into this promising segment.
Artificial Intelligence: The Key Behind the Boom
The battle for dominance in artificial intelligence required immense information processing capacity, provided by this infrastructure which is powered by NIVIDIA chips.
“Nvidia’s numbers reflect the exponential growth in demand for chips. Since the launch of ChatGPT, Nvidia’s sales have increased fivefold, reaching $30 billion in the second quarter of the year,” Cohen explains.
Nvidia, which has almost no rival, has a profit margin of 55% on its sales. This is how this technology company earned a place on the podium of the largest technology companies in the world, surpassing in market value leaders such as Alphabet, Amazon, Meta and Tesla.
Nvidia: what projections does the market make?
Nvidia is projected to see revenues of $151 billion over the next 12 months (+56.6% YoY) and profits of $83 billion. If so, NVIDIA’s profit would easily exceed the numbers of Amazon, Meta and Tesla. fundamentals.
“Beyond the above, its valuation multiple of 35.2x expected earnings indicates that the market maintains a high level of optimism about the company’s ability to continue growing rapidly,” says de Cohen.
And they close: “The main risk is that the company’s enormous profitability, which has the highest profit margin in the groupis beginning to attract competitors, and that could ultimately put a damper on both its sales growth and its pricing power.”
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
