Everyone’s talking about AI chipmaker Nvidia. Nvidia’s (NVDA) stock has soared 196% since August 2022 - growing more than 220% this year alone - and while all eyes are on what’s next for the tech innovator that began life in a Silicon Valley diner, the company’s forecasts indicate that these may not be flash-in-the-pan results.
Nvidia co-founder, president and CEO Jensen Huang - whose own net worth at the helm of the tech titan for 30 years now places him 28th richest person on the planet - expects sales of their sought after processors to climb 170% this quarter, likely surpassing their projected US$16 billion - numbers that may place Nvidia on track to reach their forecast annual revenue of US$50 billion. This is five times greater than 2020 when crypto-mining started to inflate demand for GPUs, with net profit increased from 10% in 2022 to around 46% in the current third quarter.
With clients Alphabet, Amazon, Meta and Microsoft boosting Nvidia’s data centre revenues, Nvidia’s gain hasn’t helped AMD (AMD) and Intel (INTC) with both companies’ stock falling 6% and 1% respectively since Wednesday. But has Nvidia’s success rubbed off on Taiwan Semiconductor Manufacturing Co (TSM - ADR), which manufactures the bulk of Nvidia’s orders? Morgan Stanley analysts estimate that TSMC’s revenue from AI semiconductors may grow 6% this year, and following Nvidia’s highly anticipated earnings report last Wednesday, Asia’s semiconductor stocks climbed.
Nvidia’s parallel processing packs a punch. 🥊 Nvidia’s Hopper 100 GPU (H100), which retails for US$30,000, holds 80 billion transistors, which is a cool 13 million more than Apple’s next gen SoCs (systems on a chip) used in their most recent MacBook Pro. In March this year, Huang told CNBC he ‘hand-delivered’ his Hopper to ChatGPT-maker OpenAI, adding:
‘What makes Hopper really amazing is this new type of processing called transformer engine. The transformer engine is the T of GPT, generative pre-trained transformer. This is the world’s first computer designed to process transformers at enormous scale. So large language models are going to be much, much faster and much more cost effective.’
Chip-chip-chippin’ away ⛏️
Nvidia’s US$1.157 trillion mega cap was three decades in the making:
- 1993: ‘Scrappy underdog’ Nvidia - from ‘invidia’, the Latin word for envy - was founded in California by a trio of engineers with an eye for the future, kicked off by building 3D gaming graphics
- 1999: What proved a game changer - literally - Nvidia invented graphics processing units (GPUs) starting with GeForce 256, launched the Partner Network, and listed on the Nasdaq in January for US$12 at the peak of the dotcom bubble - investors who bought US$10,000 Nvidia stock then could be sitting on US$7,521,739 today
- 2006: Alongside building parallel computing platform CUDA, Nvidia ensured their programming language was taught at more than 200 universities worldwide
- 2012: Nvidia took a ‘whole company’ approach, launching modern AI, with every chip made ‘focused on artificial intelligence’, Huang revealed in his CNBC interview
Driving on the moon? 🌕 Generative AI might still be on training wheels, but that didn’t stop the world’s largest advertising agency, WPP, from ‘going all in’ with Nvidia this May, jumpstarting generative AI advertising. Yep, cars dusting it up on the moon might be coming to a screen near you any day now.
Nvidia deflected August waves that struck the ‘magnificent seven’
The US summer vacay season sucked the tide out from the share markets, leaving six of the world’s biggest tech stocks - which comprise around 51% of the Nasdaq 100 Index (^NDX) - landing a bumpy ride this August, shooting the Index down 4%:
- Amazon (AMZN): down 0.4% during the month
- Alphabet (GOOGL, GOOG): down 1%
- Apple (AAPL): down 8%
- Meta (META): down 9%
- Microsoft (MSFT): down 3%
- Tesla (TSLA): down 10.5%
And while spring might spell optimism for our Kiwi summer, it may yet be a nervous wait on Wall Street hoping the tide rushes in to eclipse the September Effect. 🌊