Bas' Take on Tech: The Success of NVIDIA
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🤖 The Success of NVIDIA
The chip company NVIDIA presents its financial report, the share price jumps above 1,000$.
In one of the last issues of my newsletter, I dealt with the RISC architecture, which is well on the way to stealing Intel's thunder.
NVIDIA - the name comes from the Spanish “envidia”, which means “envy” - is a big beneficiary of the changing computing environment and, of course, the AI boom.
What about the annual report that NVIDIA published last Wednesday? Profit: Increased sevenfold in just one year. Turnover: Better than expected at 26.04 billion dollars in the first quarter. Return on sales? Almost 50%. The share price jumped well above 1,000$ in early US trading on Thursday. Competitors and investors could be envious.
“The next industrial revolution has begun,” said Huang, founder and CEO of NVIDIA. The Group has been benefiting from lush demand for several years now: first, the computer parks for the Bitcoin network needed fast chips, then came the computer boom during covid. However, since the launch of the chatbot ChatGPT with so-called artificial intelligence in November 2022, demand has become “stratospheric”, as they say on the stock exchange.
After all, if you want to feed and train AI models with huge amounts of data, there is no way around NVIDIA’s high-performance H100 chip. The company has now secured almost 100% market share in the data center market.
However, there are now more and more doubters who do not see NVIDIA’s legendary rise as a sure-fire success. According to estimates, the four corporations Amazon, Meta, Microsoft and Alphabet alone account for 40% of NVIDIA's sales of high-performance chips. The fact that these tech giants are now working on their own chips should not have escaped NVIDIA’s notice. This would allow the companies to free themselves from the clutches of NVIDIA's dominance and tailor the chips to their highly specialized needs.
Intel recently presented its own top chip “Gaudi3”. Although it may still lag behind NVIDIA's latest developments in terms of technology, it will increase pressure on chip prices.
In this respect, NVIDIA CEO Huang had to justify himself several times during a conference call with analysts in the eyes of the stock market. In the future, his company will not only want to sell more individual chips but also combine them into supercomputers. And if that wasn't enough, Huang also announced more business with car manufacturers and healthcare companies, which will also have to rely more heavily on artificial intelligence in the future. On top of this, a partnership with Dell is intended to bring special computers for artificial intelligence to medium-sized companies that do not directly require an entire data center.
Stock price is still rising since the earnings report. RISC, more than AI, could drive further growth, depending what Intel still has up its sleeve.
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