For most of its three decades of existence, Nvidia was mainly a niche company, making computer chips for video games, but the company’s central position in the artificial intelligence boom has led to a spectacular rise.
Nvidia sells graphics processing units (GPUs) and crucial software for training and running AI algorithms that power chatbots and image generators.
See how Nvidia became one of the most valuable companies in the world.
- Date: January 22, 1999
- Market value: less than US$1 billion
Nvidia went public in January 1999 at $12 a share, six years after its founding and a year before the dot-com crash wiped out much of the stock market value of the burgeoning Internet industry. The company was building a reputation for making some of the best video game chips, and in 2001 it won a contract to supply GPUs for Microsoft’s Xbox gaming console.
- Date: November 4, 2021
- Market value: US$743.8 billion
Nvidia had long been traded by professional investment firms, but during the pandemic, millions of people with day jobs began investing in stocks through apps like Robinhood and online forums like Wall Street Bets. Gamers turned retail investors have recognized Nvidia as the company that helped drive improvement in video game graphics over the past two decades.
In 2021, Facebook rebranded itself as Meta and brought renewed interest in the concept of the metaverse—a future where people spend much of their time connected to a virtual world. Nvidia CEO Jensen Huang took advantage of the idea and said that his company’s chips would power the future world of the metaverse. He even used a digital clone of himself speaking at Nvidia’s annual conference to showcase the technology.
Meta’s big plans for the metaverse haven’t yet come to fruition, but at the time, some investors were betting it would be the next big thing. On November 4, 2021, financial analysts at Wells Fargo published a report detailing how Nvidia was well-positioned to benefit from the prophesied metaverse boom, and shares jumped 12%.
- Date: February 22, 2023
- Market value: US$582.3 billion
In late 2022, OpenAI, a nonprofit artificial intelligence lab founded in 2015, unveiled ChatGPT. It was more capable than any chatbot that normal people interacted with with yet. The technology industry was delighted, and within months Microsoft invested billions in OpenAI. The AI arms race was underway.
Nvidia’s chips and software are crucial for building the “big language models” that serve as the underlying technology in ChatGPT and image generators like OpenAI’s Dall-E 3, launching in 2023.
Huang told investors on February 22, 2023, that the company would benefit from the rapidly gaining momentum AI boom. Wall Street was convinced, and the stock rose 14%, valuing the company at $582.3 billion.
Pickaxes and Shovels for the AI Gold Rush
- Date: May 24, 2023
- Market value: US$ 1 trillion
Nvidia shares continued to rise. In May 2023, Nvidia reported earnings showing for the first time with real numbers that it was the main beneficiary of the AI frenzy. Shares rose 25% and the company’s valuation briefly surpassed $1 trillion, making it one of the few companies to reach that mark.
As the company reported higher revenue numbers, more investors jumped in, pushing the stock higher until it ended the year valued at $1.2 trillion. Because many AI startups and companies, including OpenAI, are not public, there were few options for ordinary people to invest in the AI boom. Many bought Nvidia stock.
Big Tech spends even more
- Date: May 22, 2024
- Market value: US$2.6 trillion
In the first quarter of 2024, Nvidia’s revenue increased to US$26 billion, compared to just US$7.2 billion in the same period of the previous year.
AI startups, companies trying to add AI to their products, and venture capital firms are all trying to get their hands on Nvidia chips by increasing their price. But the biggest buyers are big tech companies Microsoft, Amazon, Meta and Google, which need the chips to build and train their own AI models.
Earlier this year, Microsoft, Meta and Google told their investors they would increase spending on AI investments. Google alone plans to spend at least $12 billion every four months this year. Much of this money goes straight into Nvidia’s coffers.
