The chips that perform artificial-intelligence calculations are so valuable that they are delivered in armored cars
It took Nvidia NVDA 16.40%increase; green up pointing triangle 24 years as a public company for its valuation to reach the rarefied air of $1 trillion. Thanks to the chip maker’s role in powering the AI revolution, the company is closing in on adding a second trillion in just eight months.
The journey to become one of the three most-valuable U.S. companies might have started at a Denny’s in 1993, but it has been fast-tracked by Nvidia’s dominance of GPUs, or graphics processing units. These chips, worth tens of thousands of dollars each, have become a scarce, treasured commodity like Silicon Valley has seldom seen, and Nvidia is estimated to have more than 80% of the market.
Voracious demand has outpaced production and spurred competitors to develop rival chips. The ability to secure GPUs governs how quickly companies can develop new artificial-intelligence systems. Companies tout their access to GPUs to recruit AI workers, and the chips have been used as collateral to back billions of dollars in borrowing.
The chips are so valuable that they are delivered to the networking company Cisco Systems by armored car, said Fletcher Previn, Cisco’s chief information officer, at The Wall Street Journal’s CIO Network Summit this month.
On Wednesday, after Nvidia turned in a third straight quarter of forecast-beating results, company executives said that supplies were still tight and that a new generation of AI chips expected to be launched this year will be supply-constrained.
The design of the chips makes them critical parts for training the giant language models that underpin generative AI bots such as OpenAI’s ChatGPT. Much of the AI spending by such tech giants as Microsoft, Alphabet and Amazon.com has gone to GPUs.
Jensen Huang, Nvidia’s chief executive officer and co-founder, said generative AI is kicking off a wave of investment worth trillions of dollars, which he believed would double the amount of data centers in the world in the next five years and deliver market opportunities for Nvidia.
“A whole new industry is being formed, and that’s driving our growth,” he said on the company’s earnings call. Nvidia on Wednesday reported quarterly sales of $22.1 billion and forecast another $24 billion for its current quarter, each more than triple what was posted a year earlier and ahead of Wall Street’s bullish expectations.
The results lifted Nvidia shares Thursday to their highest-ever close of $785.38, valuing the company at $1.96 trillion. The stock has jumped 59% so far this year after more than tripling in 2023.
Founded more than 30 years ago with an initial focus on computer graphics chips for PC gaming, Nvidia latched on early to AI.
Source : https://www.wsj.com/tech/ai/nvidia-stock-market-cap-2-trillion-b1c839c8?st=k35wx416oed7fk1