The artificial intelligence (AI) revolution is upon us, and at its vanguard is a name that might not be as household as Apple, Google, or Amazon but is nevertheless shaking the foundations of the technology world. That name is Nvidia. A pioneer in computer graphics, Nvidia is now basking in the glow of a significant boom in AI applications, consequently cementing its position as one of the most valuable companies on the planet.
Long before AI was a buzzword, Nvidia had made a name for itself in the computer graphics realm. Established in 1993 by a trio of chip engineers, the company had foreseen the critical role of visual processing in computing evolution. This visionary stance has led Nvidia to secure a contract with Microsoft in the early 2000s to supply chips for the Xbox gaming console, a significant breakthrough that drove the company to new heights as the gaming industry began to dwarf traditional entertainment sectors like film, television, and music.
However, the real turning point for Nvidia came when AI research began to bear fruit. Those very chips initially designed to render immersive gaming environments found themselves well-positioned to power the next frontier in computing – artificial intelligence.
The recent earnings report from Nvidia paints a vivid picture of this transformation, exhibiting a surge in demand so high that it resulted in an unprecedented single-day increase in the company’s value, catapulting its worth to $939.3 billion, surpassing the likes of Tesla and Facebook. With this remarkable upsurge, Nvidia is nipping at the heels of Big Tech stalwarts and the Saudi Arabian oil mammoth, Saudi Aramco.
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Greg Osuri, the founder of Akash Networks, underscores the significance of Nvidia’s graphics processing units (GPUs) in the AI equation. “Training AI models demands chips that have high amounts of memory. Nvidia happens to be the only company that makes those chips,” says Osuri. As such, both tech giants and start-ups scramble to secure Nvidia’s GPUs, essential tools for running complex AI algorithms like Google’s PaLM 2 or OpenAI’s GPT4.
David Luan, co-founder of AI start-up Adept Labs and a former Google and OpenAI engineer, noted at the Newcomer AI conference in March that once an AI company refines its business model, the next step is invariably “sending checks to Jensen,” a reference to Jensen Huang, Nvidia’s CEO. This assertion speaks to the pivotal role that Nvidia plays in the unfolding AI narrative.
Nvidia’s Chief Financial Officer, Colette Kress, likened the launch of OpenAI’s ChatGPT, a chatbot capable of sophisticated interactions and tasks, to an “iPhone moment.” This pivotal point demonstrates the profound potential of AI technology and the promise it holds for transforming our world.
The company’s staggering market valuation is reflective of its critical role in the burgeoning AI market. Nvidia’s projected sales for the second quarter are a whopping $11 billion, a number that far exceeds Wall Street’s forecast of $7 billion. “The numbers blew everyone away,” said CJ Muse, an analyst with Evercore Inc., encapsulating the market’s reaction.
While Big Tech is exploring options to develop their own chips to mitigate dependency on Nvidia, it is unlikely to dampen Nvidia’s dominance. Muse concurs, predicting a sustained dominance by Nvidia in the near future. As the AI revolution unfolds, Nvidia stands poised at the precipice, ready to lead the charge and reshape the landscape of technology and beyond.
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