Introduction:
Since 2023, Nvidia has constantly been in the news, making global headlines due to their all-in bet on AI. At the time of writing this article, Nvidia surpassed Apple Inc. to become the second most valuable company by market cap, only behind Microsoft.
Analysis:
What’s surprising is how much a company can grow in valuation in just a span of 1–2 years. Just have a look at this graph on Nvidia’s valuation
The above graph shows how Nvidia went from a valuation of 686.27 Billion USD in April 2023 to 2.97 Trillion USD in June 2024.
This nearly exponential growth in valuation happened in such a small time period of an year and this makes me wonder if this is just a hoax.
The company has been very aggressive in their alignment with AI. Ever since the tech industry began adopting Generative AI thanks to the revolution ChatGPT brought, the Company’s shares have been soaring since they are ultimately the chipmakers who are manufacturing the chips as AI advancements such as large models needs extensive CPU’s, GPU’s and TPU’s.
With giants like Amazon, Microsoft, Google, Meta being the company’s largest customers, Nvidia has been receiving a massive surge in orders for manufacturing chips for them. Even companies like Tesla and AI startups like OpenAI which is famous for ChatGPT acquires their chips from Nvidia.
Moreover the company has been heavily investing in their Research and Development and with release of CUDA and PyCUDA, they aim at empowering developers and making a community of developers. This is a unique way they capture market from their rivals such as AMD and Intel and establish their monopoly. With their market share being around 88% currently, they are very close to totally monopolizing the chipmaker industry and once that happens, it will be a massive boost for them.
The company has reported a significant increase in revenue, especially their data center revenue, with a record full-year revenue of $60.9 billion, up 126% from the previous year.
Nvidia’s CEO, Jensen Huang, has ambitious goals and thoughts. He frequently speaks about AI as a revolution. Recently, at a conference, he famously said, referring to AI, that it is “going to make computers smarter so that people don’t have to learn computer science to program a computer.” This statement emphasizes his support for AI’s goal of disrupting and revolutionizing the tech industry worldwide.
Conclusion:
I personally think that with the rise of AI and the awareness which has been brought by platforms such as ChatGPT. There has been a surge in the field and AI seems to be the next big thing in the tech world. With Nvidia being closely knit in the chip manufacturing field, it is inevitable that they will witness growth. Although it can’t be said that they can sustain this growth since its competitors are leveling up their game too. So I don’t think the bubble will burst, instead it can shrink or grow even further. It totally depends on how Nvidia handles themselves. Currently they are doing a fantastic job and I think they may even surpass Microsoft to become the most valuable company in the world this year itself.
