Nvidia briefly became a member of the Trillion Dollar Club, stocks with a market capitalization over $1 trillion. It’s all thanks to AI. but why? What does semiconductor companies have to do with AI? Yahoo Finance’s Dan Howley explains what gives Nvidia an edge.
video transcript
Brad Smith: This year has been an important year for NVIDIA. The company continues to see its share price climb over 170% of his, and that’s what we’ve seen so far this year. Strong earnings also temporarily made NVIDIA the first chip company to surpass $1 trillion in market capitalization. – dollar mark. But with the generative AI hype showing no signs of abating, Nvidia could be the biggest winner. Yahoo Finance’s Dan Howley explains the details. Dan, please help me elaborate on this further. A company called Nvidia has come and gone, but is still in the ballpark as a trillion-dollar club.
Dan Howley: OK, so let me briefly explain why Nvidia is in this position. The company was founded decades ago and was then focused on video games. But when they started trying to expand, they looked for new ways to leverage those graphics chips to grow their market and opened it up to developers. And they basically found that the parallelism provided by graphics processing units was far superior to central processing units (CPUs) at processing AI data. That’s why we see Nvidia grow in earnest here.
When it comes to processing, the reason they beat AMD and others in this space is because they recognized it early on and invested heavily in it to take advantage of it. They’ve been talking for years about how they’re working on AI, how they have servers, how they have software. I mean, they’re a full-stack company from soup to nuts, and they’re a great company to do that, but their product is so lacking that people are seriously thinking about how they get potato chips at this point. are fighting We’re not talking about small businesses, we’re talking about companies like Microsoft, Google, and Meta. They’re all trying to get Nvidia servers and chips, so that’s why this company has really grown and done so well.
Now, obviously, the generative AI hype has a lot to do with it. However, I think it’s important to note that while generative AI itself is highly hyped, it’s not the whole story when it comes to AI. As we have said many times, AI has been around for quite some time and businesses are already using it. That’s why NVIDIA has been able to do so much work in his AI field.
Generative AI isn’t the only thing that made Nvidia an overnight hit. NVIDIA has been working in the AI space for quite some time, improving its capabilities, releasing more and more new servers and processors, and gathering interconnected companies. It allows different devices to communicate with each other faster. So this is something his NVIDIA has been working on for a long time. Generative AI is arguably the most talked about type of AI today.
Look, this may not be the last iteration of AI we’ll see. Not really, there will be new versions of AI that do different things. This is a specific part of AI. AI is a broad technology and Nvidia will continue to do well on AI in general.
Now comes the rival. AMD is working on something, Intel is clearly working on something, and Qualcomm is coming out and saying it’s all about AI. Broadcom and Marvell are all working on their own technology, regardless of whether third parties like Google make their own chips. But for now, NVIDIA is really on this hype train, and they’re the conductors.
Julie Hyman: I like that analogy, Dan. Thank you very much. appreciate.
