Nvidia’s stock surged this week. How the AI boom played a role – National
Nvidia Corp closed in on a trillion-dollar market value on Thursday as shares surged 25 per cent following a bumper earnings report that forced Wall Street to reassess the potential windfall for the chipmaker from an artificial intelligence boom.
Here’s an explainer on Nvidia its role in AI boom.
HOW BIG IS NVIDIA IN TERMS OF MARKET VALUE?
The semiconductor company’s shares have risen more than 160 per cent this year, adding $586 billion in market value, making it the fifth most valuable U.S. company behind Apple, Microsoft, Alphabet Amazon.
FROM GAMING TO AI: NVIDIA’S FOCUS SHIFT
Nvidia, known for its chips used in videogames, pivoted to the data center market over the last few years.
The company’s business rapidly expanded during the pandemic when gaming took off, cloud adoption surged crypto enthusiasts turned to its chips for mining coins.
Data center chip business accounted for more than 50 per cent of the company’s revenue in the financial year ended Jan. 29.
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WHY IS GENERATIVE AI A HOT TOPIC?
The viral chatbot, ChatGPT, has made generative AI a buzzword this year. The technology uses vast troves of pre-existing data to create new content ranging from poems to images even computer code.
Microsoft Corp Alphabet Inc-owned Google, two of the biggest players in the space, believe that generative AI can change how work is done. The two have raced to add the technology to their search engines productivity software as they seek to dominate the industry.
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Goldman Sachs analysts estimate that U.S. investment in AI could approach 1% of the country’s economic output by 2030.
WHAT IS NVIDIA’S ROLE IN THE AI BOOM?
The large computers that process data power generative AI run on powerful chips called graphics processing units (GPUs).
Nvidia produces about 80% of GPUs, according to analysts.
GPUs are designed to handle the specific kind of math involved in AI computing very efficiently. By contrast, generic central processing units from companies like Intel handle a broader range of computing tasks with less efficiency.
OpenAI’s ChatGPT, for example, was created with thousands of Nvidia GPUs. Tesla CEO Elon Musk has also secured GPUs from Nvidia for his AI startup, the Financial Times reported in April.
WHO ARE NVIDIA’S RIVALS IN THIS MARKET?
Nvidia’s main competitors include Advanced Micro Devices AI chips made in-house by companies such as Amazon.com, Google Meta Platforms.
(Reporting by Chavi Mehta in Bengaluru; Editing by Sriraj Kalluvila)