Riding the AI wave has turned Nvidia into a technology industry behemoth
Nvidia is now the most valuable company in the world as the generative AI frenzy which fueled sales of its high-end chips shows little sign of ending.
The chip-maker made it to the top spot by leapfrogging Microsoft just weeks after overtaking Apple to secure second place. Nvidia’s share price has rocketed in the last 18 months – in January 2023 it stood at less than $15, and it’s currently at $135, making the company worth $3.34 trillion.
The company has successfully ridden the wave of generative AI that has swept through the tech industry during this period because it provides the fundamental building blocks needed by every AI company – the immensely powerful GPUs they need to build and run AI models.
In any gold rush it’s the sellers of the picks and shovels that make the most money, and in the AI rush the equivalent is the high-performance chips and infrastructure around them provided by Nvidia.
On its most recent earnings call, Nvidia gave some idea of the scale of the investment being made by big tech companies in training and running large language models (LLMs).
Big AI players from OpenAI and Anthropic through to DeepMind and Meta are all building on Nvidia. Tesla’s expansion of its training AI cluster, for example, features 35,000 H100 GPUs, while Meta trained Llama 3, its latest LLM, on a cluster of 24,000 H100 GPUs.
While the pricing of these GPUs varies, they can easily run into tens of thousands of dollars each, which goes a long way to explain why Nvidia shares are riding so high.
Nvidia said clusters like the ones built by Meta and Tesla are examples of what it describes as ‘AI factories’, next-generation data centers “where the data comes in and intelligence comes out”.
