It is now the fifth most valuable US company and is being described as one of the first major corporate beneficiaries of the hype around artificial intelligence (AI), which has seen investors pouring money into the company after an upbeat earnings forecast last week, based on the demand for generative AI.
According to the company’s CEO, Jensen Huang, Nvidia is benefitting from AI’s ‘iPhone moment’ with interest in the technology growing rapidly, aided by the introduction and coverage around OpenAI’s Chat GPT.
Huang said that he was seeing the beginnings of a ten-year transition to, “basically recycle or reclaim the world’s data centres and build it out as accelerated computing.”
Nvidia is benefitting more than most as it has created a dominant position in the AI space and has been described as the ‘poster child for AI’ by some analysts. In fact, the firm expects to bring in $11bn in revenue in the upcoming quarter – $4bn more than Wall Street expected.
It’s invested heavily in AI and is now the largest supplier of AI chip technology. By contrast, many of its competitors have focused on existing markets and are now scrambling to catch up – Intel and AMD come to mind. Consequently, Nvidia is seen by many as essentially the ‘only game in town’.
The future certainly looks positive for the chip manufacturer and growth is expected to continue, few companies will be able to match its scale and scope for many years. However, some have expressed concern at corporate valuations heading north of the $1trn mark and have talked of a market frenzy as a result of the interest in AI.
Wherever market sentiment goes, Nvidia is well positioned to exploit the boom in AI, and it’ll be interesting to see where its current valuation ends up.
