How Nvidia became the most popular company in the world

Nvidia, what is it? A new superfood? Not quite. We are talking about a chip manufacturer – although the manufacturer is not quite right, but more on that later – and the recent stock market miracle. But one after the other:

Nvidia was founded in 1993 in the Californian techno stronghold of San Jose by Chris Malachowsky, Curtis Priem and Jensen Huang. Priem and Malachowsky knew each other from their time together at IBM and Sun Microsystems. Huang is now the CEO of the company. Originally from Taiwan but raised in the state of Kentucky, he is a fan of Steve Jobs. He always wears dark jeans, a black shirt and a black leather jacket.

Nvidia’s founders started modestly, reaffirming the cynical adage that progress in the IT industry is in the porn industry or in gaming. The latter was the case with Nvidia, the company initially made graphics chips for Microsoft’s Xbox.

Later, the cryptominers discovered the qualities of the Nvidia chip and let the company’s shares take off for the first time. However, in the crypto winter, these papers also crashed, but Nvidia was no longer dependent on Bitcoin & Co. “By making its chips valuable in other areas, Nvidia discovered a huge market for parallel processing, from computational chemistry (simulations on the computer) to weather forecasting,” writes Chris Miller in his book Chip War.

However, Huang could only guess at Nvidia’s actual breakthrough to become the tech industry’s youngest superstar. Miller again: “The main factor behind the use of parallel processing is: artificial intelligence (AI).”

Since ChatGPT, AI has definitely become “the next big thing”. If you want to keep up, you can’t get around Nvidia’s chips. That’s why their sales have exploded in recent months. At the end of July, sales exceeded $11 billion instead of $7 billion as expected. And that should be just the beginning: “We’re going through the most significant change since the Internet, there’s no question about that,” explains Michael Sansoterra of Atlanta-based Silvant Capital Management in the “Wall Street Journal.”

Why Nvidia doesn’t make the chips itself

At this point, a brief digression on the term chip manufacturer: the design of a chip and its manufacture are two completely different sports. Both are extremely complex so it is best to separate them. That’s exactly what Nvidia does. It does not have its own fab – that’s what the chip factories are called – but has them manufactured by the world’s leading fab, TSMC in Taiwan. Partly because of this, Nvidia has now left Intel far behind. Intel still maintains its own factories.

It is known that in the gold rush at the beginning of the last century, it was not the petty prospectors who got rich, but the manufacturers of picks and shovels. The situation is similar today with Nvidia. His chips are the key to the AI ​​tools. That is why sales have exploded and with it the market capitalization. Today, Nvidia is about to join the exclusive Trillion Club, a club that includes members such as Apple, Alphabet, Microsoft, and Amazon. Far behind, however, is the child prodigy of yesteryear: Tesla.

Is Nvidia’s meteoric rise sustainable or just a flash in the pan? Everything speaks for the first. Nvidia’s H100 chip is currently unmatched, making the company the only pick-and-shovel vendor on the scene. CEO-Huang is therefore confident: “I think we are only at the beginning of a ten-year transition that will turn the world’s data centers upside down,” he explains to the “Wall Street Journal”.