3 keys to understanding the success of Nvidia, the company whose value surpassed that of Google and set a record on the stock market.
If it already had Wall Street at its feet due to its good results and the great increase in the value of its shares, now the frenzy reached even further.
The American processor manufacturer Nvidia reached US$2 billion in market value this Friday, a frontier that only the technology giants Microsoft and Apple had conquered in the US.
Alphabet, whose main subsidiary is Google, was displaced by Nvidia in market capitalization.
“The conditions are excellent for continued growth,” the company's CEO, Jensen Huang, said in a call with investors.
Nvidia has crowned itself the world king of chips by developing powerful graphics processing units (GPUs).
These processors, the most used in the artificial intelligence industry, are electronic circuits that can perform mathematical calculations at high speed and their value is estimated at tens of thousands of dollars per unit.
They are so sought after that, as if they were diamonds, they are transported in armored trucks.
The firm has a great advantage over Intel and AMD, its biggest competitors, dominating nearly 80% of the GPU market.
These are three keys that explain the success of the California-based technology giant.
1. The leap from video games to artificial intelligence
More than 30 years ago Nvidia began as a company that manufactured chips for video game development.
Its graphics processing units began to be in high demand for the development of display functions such as rendering videos, images and animations, ideal for highly demanding video games.
This was for a long time Nvidia's main business.
The firm soon discovered that its GPUs were also useful for other demanding tasks, such as accelerating the computing performance of computers' brains, that is, central processing units.
Giants like Google, Microsoft and Amazon were interested in Nvidia processors to power their huge data centers, as did companies dedicated to crypto mining.
At the same time, engineers began using their chips to do artificial intelligence calculations, since the type of mathematics needed to build complex systems fit the way graphics chips work.
Today, Nvidia's most advanced GPUs, such as the so-called H100, are used in creating the most sophisticated artificial intelligence systems.
2. Get ahead of competitors
The company soon realized that semiconductors designed for graphics processing were also useful for training artificial intelligence systems.
Starting the race before the rest gave him a valuable advantage over his competitors.
Starting in 2006, Nvidia made clear its commitment to artificial intelligence. At that time, the company announced the creation of CUDA, a programming language that made it possible for the firm's chips to solve complex mathematical problems.
This is how the firm entered the world of artificial intelligence with its processors before its major competitors, such as Intel or AMD.
That initial advantage could be shortened if the other firms accelerate their pace, given that they are making large investments to achieve a greater market share.
And, on the other hand, giants dedicated to cloud computing, such as Amazon, Microsoft or Google, are also dedicating efforts to manufacturing their own specialized chips for artificial intelligence training.
3. A voracious demand for their products
The high demand for Nvidia processors for gaming, data centers and artificial intelligence applications continues to increase.
Particularly in the last year, interest in expensive graphics processors for servers that power large artificial intelligence models has increased rapidly.
Nvidia, which used to be a lesser-known technology firm than the rest of the giants, quickly came to the fore with the launch of ChatGPT, an artificial intelligence system developed by the company OpenAI, which uses its processors.
Nvidia chips seem to be, experts say, the most suitable for training artificial intelligence models.
What is not known is how long these processors will continue to lead the GPU market or if Nvidia's rivals will get a good slice of the pie.
For now, the balance is in their favor. Demand for one of its flagship products, the H100 chip, is so great that some customers have had to wait up to six months to receive it.
Market analysts suggest that probably
In about a year the supply of chips for artificial intelligence could improve, as AMD and Intel continue to advance with their developments.
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