Surging AI investment worldwide has propelled Nvidia’s market value towards $1 trillion, with an incredible 24% increase on May 25th.
Nvidia is on the brink of joining a highly exclusive club of $1 trillion companies with a market value of approximately $950 billion. There are currently five other members – Apple, Saudi Aramco, Microsoft, Alphabet, and Amazon.
On May 25th, Nvidia’s shares rocketed by 24% to $379.80, the company’s largest one-day increase since 2016.
So far this year, the semiconductor’s stock is up a phenomenal 172%.
Nvidia was perfectly poised to take advantage of the AI boom, with its flagship A100 and H100 chips selling for around $10,000 each.
To train advanced AI models, companies like OpenAI, Microsoft, and Baidu require tens of thousands of these chips and numerous other components.
Nvidia: a global provider of AI technology
High-end chips are exceptionally tricky to develop, so Nvidia is relatively safe from competitors popping up overnight. They reportedly hold 95% of the market share of GPUs for data centers, and analysts expect them to maintain this at around 90% for years to come.
Moreover, Nvidia offers an ensemble of products for AI developers, including high-end chips, purpose-built AI supercomputers, network solutions, and low-energy embedded solutions for portable technology like drones and self-driving vehicles. They hold the aces across all relevant product categories.
Nvidia’s customers span the globe, but some of their biggest customers are China, Taiwan, and Hong Kong, collectively accounting for over $15 billion of Nvidia’s revenue in 2022, even despite trade embargoes on US exports to China.
Nvidia managed to circumvent trade restrictions by modifying its flagship chips specifically for the Chinese market. An Nvidia spokesperson told Reuters, “Our 800 series products are fully compliant with export control regulations.”
How did Nvidia become the number 1 chip manufacturer?
Nvidia invested heavily in AI technology throughout the 2010s. In 2015, they released the TEGRA X1 and NVIDIA DRIVE, which supported deep learning research and development.
Since 2020, Nvidia has cemented its position as a premier innovator in cutting-edge computing. While AI is responsible for Nvidia’s recent surge in value, the company is also leading development in IoT and edge computing.
Does Nvidia face any competitive threats? Not right now, but China aims to become a high-end producer of chips by 2025.
For the near future, at least, Nvidia’s lead in the AI tech industry is insurmountable.