What is Nvidia’s role in recent AI booms? Why are it’s shares rising?

Nvidia Corp. hit a $1 trillion market cap on Tuesday as shares continued to rise after a hearty earnings report forced Wall Street to reassess the chip industry’s potential surprises from the artificial intelligence boom.

Here’s an explanation of Nvidia and its role in the rise of artificial intelligence.

How big is NVIDIA by market cap?

Nvidia’s $1 trillion valuation makes it the fifth most valuable US company behind Apple, Microsoft, Alphabet and Amazon.

From gaming to artificial intelligence: NVIDIA’s Focus Shift

Known for its chips used in video games, Nvidia has focused on the data center market in recent years.

The company’s business expanded rapidly during the pandemic as gaming took off, cloud usage increased and cryptocurrency enthusiasts turned to its chips to mine coins.

The share of computer chip business in the company’s turnover was more than 50% in the financial period ending on January 29.

Why is generative artificial intelligence such an interesting topic?

The viral chatbot, ChatGPT, has made generative AI a buzzword this year. The technology uses a wealth of existing data to create new content, from poems to images and even computer code.

Google-owned Microsoft Corp and Alphabet Inc, two of the biggest players in the industry, believe that generative artificial intelligence can change the way work is done. They raced to add technology to their search engines and productivity software in an effort to dominate the industry.

Goldman Sachs analysts estimate that US investment in artificial intelligence could approach one percent of the country’s economic output by 2030.

What is NVIDIA’s role in the AI boom?

The main computers that process data and power artificial intelligence run on powerful chips called graphics processing units (GPUs).

According to analysts, Nvidia produces about 80 percent of graphics performance.

GPUs are designed to handle certain types of math related to AI computing very efficiently. In contrast, generic CPUs from companies like Intel handle a wider variety of computing tasks with less efficiency.

For example, OpenAI’s ChatGPT was built with thousands of Nvidia GPUs. The Financial Times reported in April that Tesla CEO Elon Musk had also sourced GPUs from Nvidia for his artificial intelligence startup.

Who are NVIDIA’s competitors in this market?

Nvidia’s main competitors are advanced micro-hardware and AI chips made by companies such as Amazon.com, Google and Meta Platforms.