The artificial intelligence boom is impacting the entire tech industry. According to a report by Reuters, the US-based chipmaker
recently reached a market value of $1 trillion after the company’s shares surged 25%. The stock value rose after the company reported big gains with AI chips. That surge also forced Wall Street to reassess the chipmaker’s revenue potential from an AI boom. In 2023, the semiconductor company’s shares rose more than 160%. This increase added $586 billion to the company’s market value, making it the fifth most valuable US company thereafter
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How Nvidia shifted its focus from gaming to AI
Nvidia chipsets are mainly used in video games. In recent years, the company has turned to the data center market. During the pandemic, the company’s business also grew rapidly as gaming and cloud adoption increased. In addition, crypto enthusiasts also resorted to Nvidia’s chips to mine coins. The data center chip business accounted for more than 50% of the company’s sales in the last fiscal year.
Popularity of Generative AI
Generative AI became a household name after Microsoft-backed OpenAI launched its chatbot ChatGPT, which went viral. The technology uses data already available on the internet to generate new content ranging from poetry to images to computer code.
Two of the biggest players in this field,
and owned by Alphabet Inc
, also believe that generative AI can change the way work gets done. In an attempt to dominate the industry, both tech giants have also sought to add technology to their search engines and productivity software.
Analysts at Goldman Sachs have also predicted that US investment in AI could account for close to 1% of the country’s economic output by 2030.
Nvidia’s role in the AI boom
Graphics processing units (GPUs) are powerful chips used in large computers to process data and run generative AI. According to analysts, Nvidia produces about 80% of these GPUs.
AI computing requires a certain type of math, and GPUs are designed to handle it very efficiently. For comparison: Traditional central processing units (CPUs) manufactured by companies such as
are better able to handle a wider range of computational tasks with less efficiency.
For example, thousands of Nvidia GPUs were used to create OpenAI’s ChatGPT. Tesla CEO in April
He’s also reportedly secured GPUs from Nvidia for his AI startup.
Modern micro devices (
) and AI chips made by companies like Amazon, Google, and ourselves
are among Nvidia’s main competitors.