The business world is increasingly banking on artificial intelligence to be the next big thing, and has found itself turning to one maker of computer chips in particular \u2014 Nvidia \u2014 to power the revolution.<\/p>\n
On Tuesday, Nvidia shares were up another 5%, leading the Nasdaq stock index, which represents technology firms, to a new all-time high. Over the past 12 months, Nvidia shares are up some 180%.<\/p>\n
What makes Nvidia so special?<\/p>\n
Founded in 1993 \u2014 famously, over a meal at Denny\u2019s \u2014 Nvidia <\/strong> designs a special kind of programmable computer chip. <\/p>\n For decades, Intel and Advanced Micro Devices had dominated the U.S. chip sector.<\/p>\n But those companies specialized in producing CPUs \u2014 central processing units, which serve as the foundation for basic computing and software processes.<\/p>\n Nvidia, meanwhile, specialized in graphics processing units (GPUs). As their name suggests, GPUs are better able to render images, which meant that they were first associated with video and computer games. <\/p>\n But it turns out GPUs are also able to perform calculations concurrently in a way that regular CPUs cannot \u2014\u00a0making them more energy efficient and better able to handle sophisticated computing demands. <\/p>\n Over time, the other big chip makers began manufacturing their own GPUs to compete \u2014\u00a0but Nvidia, having enjoyed a first-mover advantage in the space, was where companies began to turn to for GPU needs. <\/p>\n It combined its chips with a suite of accompanying software that programmers simply preferred. Plus, its supply chain allowed it to produce GPUs in larger volumes, faster, and more reliably, than its rivals. <\/p>\n For instance, auto companies began turning to Nvidia chips for use in driver-assistance software that must process image information from sensors. <\/p>\n Nvidia hardware is now found in all Tesla vehicles.<\/p>\n Still, until 2020, Intel was a larger company by market capitalization than Nvidia. <\/p>\n Pandemic surge turns into AI revolution<\/p>\n During the pandemic, the shift to remote work and subsequent demand for data centers that could enable cloud-based computing \u2014 plus even more interest in video games while everyone was stuck indoors \u2014 accelerated Nvidia\u2019s revenues even further.<\/p>\n Then Silicon Valley, led by OpenAI, began to realize the potential of artificial intelligence to transform how all companies do business.<\/p>\n The Nvidia ecosystem, from its software to its sourcing of materials, allowed it to position itself as the go-to source for companies that needed massive computing power to handle their AI needs.<\/p>\n Nvidia\u2019s fortunes have since gone stratospheric: Today, it is worth nearly $3 trillion according to its current stock price \u2014 nearly as much as Apple.<\/p>\n Company co-founder and CEO Jensen Huang acknowledged in an interview with CNBC last year that a combination of luck and skill has led to the company\u2019s success.<\/p>\n \u201cWe just believed that someday something new would happen, and the rest of it requires some serendipity,\u201d Huang said. \u201cIt wasn\u2019t foresight. The foresight was accelerated computing.\u201d<\/p>\n Today, virtually every major tech company, including Amazon, Google, Meta, Microsoft and Oracle, has made use of Nvidia chips.<\/p>\n Bloomberg News has called Nvidia\u2019s chips the \u201cworkhorse for training AI models,\u201d and PNC Financial Services Group analyst Amanda Agati described Nvidia\u2019s lead in the category last fall, based on its valuation, as a \u201cquasi monopoly.\u201d<\/p>\n For Moody\u2019s Senior Vice President Raj Joshi, Nvidia represents the \u201cdominant\u201d infrastructure player behind the current rise of the AI sector.<\/p>\n While other chip designers continue to work to catch up to Nvidia, the company\u2019s three decades\u2019 worth of GPU specialization \u2014 represents a massive advantage, he said. <\/p>\n \u201cThis emerging field [AI] is better supported by GPUs,\u201d Joshi said in an interview with NBC News, adding: \u201cNvidia is providing the foundation for it in most cases.\u201d<\/p>\n Nvidia also offers solutions for other sectors, like health care, that are not specifically tech-oriented, Joshi said.<\/p>\n \u201cThey have a big lead in these markets,\u201d he said.<\/p>\n Nvidia\u2019s specialization means it is able to charge a premium for its products. In fact, its chips, which are manufactured in Taiwan, are so unique that companies looking to build AI capabilities are complaining that there is a shortage of them.<\/p>\n While the Biden administration\u2019s 2022 CHIPS and Science Act is designed to spur development of GPUs \u2014 and do so on U.S. shores \u2014 there is already concern about keeping up with market forces.<\/p>\n \u201cThe\u00a0volume of chips that <\/strong>[AI companies] <\/strong>project they need is mind-boggling,\u201d U.S. Commerce Secretary Gina Raimondo said this week. She suggested even more federal subsidies would be needed if the U.S. hoped to be a meaningful player in chip manufacturing.<\/p>\n \u201cI suspect there will have to be \u2014 whether you call it \u2018CHIPS Two\u2019 or something else \u2014 continued investment if we want to lead the world,\u201d Raimondo said during a virtual appearance at an Intel event. \u201cWe fell pretty far. We took our eye off the ball.\u201d<\/p>\n In the meantime, investor interest in Nvidia remains frenzied. While some have speculated that its success could be a bubble, many Wall Street analysts say its financial statements have been proof that its product is viable.<\/p>\n \u201cThe health of their core data center business is genuinely stunning,\u201d Goldman Sachs\u2019 Tony Pasquariello wrote in a note to clients Friday.<\/p>\n Because it is now so much more valuable, Nvidia\u2019s financial results carry greater weight for major stock indices, acording to Agati, who is chief investment officer and managing executive for investments at PNC.<\/p>\n In other words as Nvidia goes, so goes the stock market.<\/p>\n \u201c[Nvidia] has become critical to the market\u2019s path forward,\u201d Agati said in an email to NBC News, adding: \u201cIn the saying \u2018data is the new oil,\u2019 Nvidia continues to prove it is in a league of its own.\u201d<\/p>\n<\/p>\n The business world is increasingly banking on artificial intelligence to be the next big thing, and has found itself turning to one maker of computer chips in particular \u2014 Nvidia \u2014 to power the revolution. On Tuesday, Nvidia shares were up another 5%, leading the Nasdaq stock index, which represents technology firms, to a new […]<\/p>\n","protected":false},"author":0,"featured_media":5025,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-5024","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5024","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=5024"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5024\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/5025"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=5024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=5024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=5024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}