It may not be a household name in the UK, but the computer chip maker has quickly become one of the world’s most successful companies, and its products are used by most of Silicon Valley’s major technology firms.
by Daniel Binns, business reporter
Friday, 21 June 2024 07:16 UK
Name any major tech brand — Google, Amazon, Tesla, ChatGPT — and you’re likely to find Nvidia involved in some way.
The computer chip company may not be a household name in the UK, but it has overtaken Microsoft and Apple in The world’s most valuable publicly traded companies.
update:
Microsoft is once again the world’s most valuable company
The company’s market capitalization is now more than $3.3 trillion (£2.6 trillion) and its shares have risen nearly 600,000% since they first traded on the US stock market in 1999.
If you’d invested $10,000 (£7,850) in the company back then, your shares would be worth more than $59m (£46m) today.
Nvidia co-founder and chief executive Jensen Huang’s net worth has also ballooned to a staggering $119bn (£93bn) as a result, according to Forbes magazine.
But how on earth did this happen?
Next version envy
Nvidia was founded in 1993, when Huang met two engineering graduate friends at a Denny’s restaurant in California.
The billionaire immigrated to the US with his family from Taiwan and worked at a branch of the chain as a teenager.
The three initially focused on developing computer chips that would enable personal computers to display “realistic” 3D graphics and worked on video games.
Huang, 61, said the 24-hour restaurant was an ideal meeting spot because “there’s unlimited coffee and you won’t be kicked out”.
After the caffeine-fueled session, Huang got straight to work with friends Chris Malachowski and Curtis Priem at an apartment in Fremont, California.
They came up with the name Nvidia by combining “NV,” which stands for “next version,” and “Invidia,” which means “envy” in Latin.
The friends wanted to make computing so fast it would dwarf the competition, an idea that even inspired the company’s logo, featuring an envious, glaring “green” eye.
Intelligent Chip
In the 1990s, the computer chip market was dominated by companies such as Intel, the leading manufacturer of central processing units (CPUs), the key foundation for basic computing and software processes.
However, Nvidia has managed to carve out a niche for itself by focusing on graphics processing units (GPUs), which are a key element in computer gaming as they help render images.
The company built a reputation for helping to revolutionize electronic entertainment and went public in 1999.
Nvidia’s early successes included GeForce, a graphics card that could be plugged into a PC to give it extra power.
Writer Steven Witt said the device’s early popularity was driven in particular by the Quake series of first-person shooter games.
The company soon enjoyed further success when it signed on as Microsoft’s first exclusive graphics provider. Xbox Game Console the year of 2000.
But it quickly became clear that the company’s GPUs could be useful for more than just shooters, platformers, and role-playing games.
A smart bet
Engineers realized that the chip could perform calculations in ways that regular CPUs couldn’t, making the chip more energy efficient and better able to handle advanced computing tasks.
So by the mid-2000s, NVIDIA started selling its products to other kinds of technology companies, and then branched out further. artificial intelligence AI in the 2010s.
For one thing, automakers quickly turned to the company to help with their driver-assistance software, and the impact was so great that NVIDIA hardware is now in every car. Tesla vehicle.
The company has also leveraged its leadership and advances in GPUs to produce chips faster and in larger quantities, putting it ahead of competitors.
But what really propelled the company to the top was its early bet on AI, including developing machine learning capabilities into its products.
“We just believed that one day something new would happen. The rest would just be luck,” Huang said in an interview with Sky News’ US partner NBC News last year.
When asked if the company’s subsequent success in AI was down to luck or foresight, he said, “It wasn’t visionary. It was accelerated computing that was visionary.”
Brian Catanzaro, who joined Nvidia in 2008 and began working on AI, told NBC News: “For 10 years, Wall Street has been asking Nvidia, ‘Why are you making this investment? No one is using it.'”
From Billions to Trillions
The company’s path to becoming a stock market champion was not without missteps.
The company tried and failed to enter the smartphone market in 2010, and Huang acknowledged that it had made “a lot” of mistakes over the years.
but, COVID-19 pandemic In 2020, businesses began turning increasingly to AI, and Nvidia’s bet began to pay off.
Among the companies using the company’s technology are Chat GPTImitators soon followed.
“There’s a war going on in the world of AI, and Nvidia is the only arms dealer,” a Wall Street analyst told The New Yorker last year.
Today, every major Silicon Valley company, including Amazon, Google, Meta and Microsoft, uses the company’s chips, and it is estimated that the company controls more than 80% of the market for technology used in AI systems.
Nvidia’s success has accelerated in recent months. It hit a market cap of $2 trillion in February and then apple In second place Early this month.
The company finally climbed to the top of the stock market on Tuesday, after its market capitalisation increased by more than $100bn (£79bn) in just a day.
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Analysts said demand was boosted by a stock split earlier this month that increased the number of shares and made the company more attractive to retail investors.
But while demand for Nvidia’s products currently outstrips supply, the company’s top spot is likely to remain under threat in the coming months and years as companies like Microsoft invest heavily in AI to catch up.