- Jensen Huang is on top of the world.
- The AI boom helped his company, Nvidia, briefly become the world's most valuable company this week.
- Future growth will depend on the success of generative AI.
It's been an unforgettable week for Jensen Huang.
The 61-year-old Nvidia CEO oversaw the company's market capitalization of $3.34 trillion, briefly surpassing Microsoft and becoming the world's most valuable company for the first time.
Nvidia has since been overtaken again by Microsoft and now by Apple, but its place among the two American tech giants vying for the top spot shows just how far the company has come.
Huang's company, which was on the brink of bankruptcy in the 1990s, is no longer just a niche provider of graphics cards designed for the gaming industry, but has become a near-integral part of the generative AI boom.
Nvidia's chips, known as GPUs, have been in hot demand from companies including Meta, Google and OpenAI, which have been looking to get their hands on hardware to help train and build increasingly powerful AI models.
Last month, the company reported fiscal first-quarter results that showed just how strong demand is, reporting record quarterly sales of $26 billion, up 18% from the previous quarter and up 262% from the same period last year.
This helps explain why the frenzy around Nvidia is reminiscent of the stock market surge during the dot-com boom.
Not only is the company well above its January 2023 valuation of roughly $400 billion, it is now worth roughly the same as the top 100 companies on the UK stock market.
The question now is how long it will last.
AI Forever?
For bulls, Nvidia's upside still has room to grow.
Since ChatGPT's launch, the most optimistic proponents of the generative AI boom being driven by Nvidia H100 GPUs have argued that a revolution that could be as impactful as smartphones and the internet has only just begun.
“The AI party is just getting started. The party goes on from 9 p.m. to 4 a.m. and the rest of the tech industry is joining in,” Wedbush analysts including Dan Ives, who called Nvidia's CEO the “godfather of AI,” wrote in a research note on Thursday.
Huang is also doing his own thing, arguing that the AI mania is just getting started.
Speaking in Taipei this month, Nvidia's CEO made the bold claim that “the combination of AI and high-speed computing will redefine the future,” and laid out a roadmap for releasing upgraded chips every year to make this future a reality.
In other words, companies in a fierce race to make generative AI smarter will do so by working closely with companies like Nvidia that can provide the necessary computing power, Huang suggests.
Prosperity or decline?
Nvidia has cemented its position as a leading provider of computing power thanks to its CUDA software, which makes it easy for companies to use its GPUs for any AI, no matter how diverse and complex it is.
But Nvidia's rise comes with one big risk: It hinges on whether the generative AI boom continues — a gamble that faces considerable uncertainty for a number of reasons.
Tech giants like Apple, Google, Meta, and Microsoft now appear to be making generative AI a priority, but they also seem to be aware of the technology’s weaknesses.
For example, earlier this month Apple CEO Tim Cook said that Apple Intelligence, the company's bold suite of AI features for iPhones, iPads and Macs, is “not 100%,” acknowledging that the technology is subject to mistakes.
Such mistakes are already threatening the reputations of other companies in the industry: Google, for example, was forced to apologize earlier this year after its generative AI image generator produced historically inaccurate images in response to user requests.
The Race to $4 Trillion
Meanwhile, Yann LeCun, head of AI at Meta, told the Financial Times last month that large-scale language models – the technology driving the generative AI boom – won't lead to the field's ultimate goal of artificial general intelligence.
If others start to feel like LLM is a dead end, that could set off a chain reaction that affects demand for Nvidia's chips as AI leaders explore whether another path is viable.
But for now, the industry seems keen to push ahead with LLM-enabled generative AI, which will put NVIDIA in a race against Microsoft and Apple at a $4 trillion valuation.
