Nvidia is worth 1000 billion dollars and has risen to the league of Google & Co – thanks to artificial intelligence. The company’s chips power pretty much everything from Playstations to chatbots.
There is a gold rush mood in artificial intelligence. Microsoft, Google and Amazon invest billions and hope that it will pay off later. The Nvidia company is already making money with AI. It’s a billion dollar business. If there is a gold rush mood, you should sell shovels and pickaxes. In Nvidia’s case, it’s the computer chips.
Earn $11 billion in 3 months
Nvidia may be unknown to many. But many people in Switzerland use products that contain the company’s computer chips in their everyday lives. Nvidia chips are installed not only in PCs and gaming computers, but also in the popular Playstation. In addition, technology from Nvidia can be found in self-driving cars or in robots from Amazon that automate logistics. However, Nvidia only recently rose to the top league – thanks to artificial intelligence.
Nvidia designs the computer chips needed to run artificial intelligence around chatbots. These are the computer chips that everyone wants right now: from Google and Microsoft to small start-ups. Nvidia designs these chips, then has them manufactured in Taiwan and then sells the very specialized chips. It’s a billion-dollar business: Nvidia earned $11 billion from January to March alone. The company is currently valued at $1 trillion on the stock exchange. This puts Nvidia in the same league as the big tech companies Google & Co.
The brain of artificial intelligence
In order to operate a chatbot that, thanks to AI, can quickly answer our questions or write texts itself, hundreds of highly specialized chips have to be bundled together. You have to think of them as neural networks. Similar to the nerve cells in our brain. As with the nerve cells, the computer chips must be able to communicate with each other in a matter of seconds.
Nobody masters this type of communication like Nvidia. The company invented software that can be used to program computer chips and connect them to networks. It goes far beyond a single chip. Nvidia bundles its chips into packages and sells or leases entire data centers with thousands of chips and the software to go with them. We’re talking about an entire ecosystem.
Google & Co. have to buy from Nvidia
Nvidia is by far the market leader when it comes to computer chips for AI, with a global market share of 80 percent. It’s worth it: a single chip from the latest generation of Nvidia costs around $40,000. Nvidia sells thousands of them – to Microsoft, for example. The new chatbot in Microsoft’s Bing search engine needs over 150,000 of these highly specialized AI computer chips. Cost to Microsoft: $4 billion.
With Google it should be much more. The company processes billions of searches per day. So that these can be answered by the same AI, Google has to invest around 80 billion francs in the chip infrastructure. That’s a lot of money even for the really big players. That’s why Google and Amazon are trying to design such computer chips themselves. And the competitors Intel and AMD are also trying to catch up. So far, however, less successful than Nvidia.
In the middle of the US-China trade war
According to experts, Nvidia is about two years ahead of the competition. And the more dominant Nvidia becomes, the more likely it is that the company will be the focus of US regulation.
It generates around a quarter of its sales in China – and is therefore subject to the trade restrictions of the United States. US companies like Nvidia are no longer allowed to sell advanced chips to China. China is not completely cut off from the chips that Nvidia manufactures. The latest generation of chips is affected: those that can communicate with each other very quickly. The US is rationing the computing power that China gets, so to speak.
Nvidia is now trying to adjust the design of the chips in order to keep the license for sale in China. At the same time, the company is politically involved and warns US politicians against limiting chip exports. China will be forced to design the chips in their own country – which is already happening.
Nvidia’s competition never sleeps, not even in China. At the moment, however, no competitor has managed to offer an all-round package: with computer chips, the associated software and a network. Meanwhile, the boom around AI is likely to continue. He made Nvidia one of the most valuable companies in the world and should continue to sell the shovels and pickaxes in this gold rush mood.