Vantage | How Nvidia became 'envy' of the world

The year was 1993, when Jensen Huang was sitting at California Diner. He had two other people with him, and together, they were starting a new company. They wanted to make a graphics chip—one that would make competitors green with envy. They chose the name NVision, but the name was already taken. So, Huang suggested Nvidia. It is from the Latin word invidia, which means envy.

About 30 years later, Nvidia is truly the envy of the world. The company reported its earnings in the fourth quarter, and that was over $22 billion—22 percent higher than the last quarter. When you compare it to last year, revenue is up by 265 percent.

Nvidia is already a Wall Street darling. Its stocks have tripled in value since last year. This time, Wall Street had lofty expectations. Nvidia managed to beat that too, and it sent the markets rallying. Nvidia’s shares jumped 12 percent in pre-market trade. It caused other tech stocks to soar.

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Asian markets joined the sentiment. Japan’s Nikkei hit a record high. It was the first time since 1989. Traders in Tokyo even broke out in applause. Europe’s Stoxx 600 hit a two-year high. It rose to almost 496 points in early trade. So, the mood in the markets, driven by artificial intelligence, is bullish.

Investors believe AI is the future, and leading that wave is Nvidia. Here is what founder Jensen Huang said: “Accelerated computing and generative AI have hit the tipping point; demand is surging worldwide across companies, industries, and nations.”

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So Huang says AI is at a tipping point. AI systems need millions of powerful chips to run, which means Nvidia will only keep growing. This company is the world’s most valuable chipmaker. It dominates the market for chips especially used in AI systems.

For example, ChatGpt was trained on thousands of Nvidia chips from companies like Microsoft, OpenAI, Amazon, Meta, and Google. All of them have deals with Nvidia. They are buying chips in bulk. This is because it’s the only player offering what they want.

Nvidia has had a headstart in this race; it took a bet years ago, which has paid off. Nvidia became a $1 trillion company. It is America’s third-most valuable company after Apple and Microsoft.

Right now, Nvidia is the most-traded stock on Wall Street. It is planning to ship a new chip called B100. It is said to be exponentially more powerful, and it has further raised expectations.

But it is not like they have no challenges; top on their list are restrictions. The US has restricted the export of high-end AI chips to China. Nvidia is still selling to China, but the numbers have dropped significantly. Then, there is supply, and the company is scaling at a record pace. Yet, it is struggling to keep up with the demand, and the third challenge is competition. Nvidia has a target on its back.

Everyone wants to make chips now. As of today, their biggest rival is a company called Advanced Micro Devices (AMD). It has released a new AI chip. Meanwhile, OpenAI is toying with the idea. It wants to start its own AI chip venture, and it wants $7 trillion for that. Intel is investing in space. It has struck a deal with Microsoft that could be worth billions of dollars. Amazon also has a custom-built chip for training AI models. So, the race is very much on.

At this point, the others are trying to catch up, but this is a high-stakes game, and Nvidia will have to work very hard to remain on top of the curve.

Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost_’s views._