Last Update: May 26, 2023, 00:13 AM IST
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Nvidia forecast current-quarter revenue of $11 billion, plus or minus 2%. Analysts polled by Refinitiv expect revenue of $7.15 billion. (Image: Nvidia logo / Reuters)
Shares of the semiconductor company have gained more than 160% this year, adding $586 billion to the market value
Nvidia Corp closed in on a trillion-dollar market value on Thursday as shares soared 25% after reporting bumper earnings that forced Wall Street to re-evaluate the potential windfall for the chipmaker from an artificial intelligence boom .
Here’s an explainer on Nvidia and its role in the AI boom.
How big is NVIDIA in terms of market cap?
Shares of the semiconductor company have risen more than 160% this year, adding $586 billion in market value, and making it the fifth most valuable US company behind Apple, Microsoft, Alphabet and Amazon.
From gaming to AI: Nvidia’s focus shift
Nvidia, best known for its chips used in videogames, has forayed into the data center market over the past few years.
The company’s business expanded rapidly during the pandemic as gaming took off, cloud adoption increased and crypto enthusiasts turned to its chips for mining coins.
The data center chip business accounted for more than 50% of the company’s revenue in the fiscal year ended January 29.
Why is generative AI a hot topic?
Viral chatbot, ChatGPT has made generative AI the talk of the town this year. The technology uses vast stores of pre-existing data to create new content ranging from poems to images and even computer code.
Google, owned by Microsoft Corp and Alphabet Inc, two of the biggest players in the space, believe that generative AI could change the way work is done. Both have raced to add the technology to their search engines and productivity software as they seek to dominate the industry.
Goldman Sachs analysts estimate that US investment in AI could reach 1% of the country’s economic output by 2030.
What’s Nvidia’s Role in the AI Boom?
The large computers that process data and power generative AI run on powerful chips called graphics processing units (GPUs).
According to analysts, Nvidia makes about 80% of GPUs.
GPUs are designed to handle very efficiently the specific types of math involved in AI computing. In contrast, generic central processing units from companies such as Intel handle a wide range of computing tasks with low efficiency.
OpenAI’s ChatGPT, for example, was built with thousands of Nvidia GPUs. The Financial Times reported in April that Tesla CEO Elon Musk has also acquired GPUs from Nvidia for his AI startup.
Who are NVIDIA’s competitors in this market?
Nvidia’s main competitors include Advanced Micro Devices and AI chips made by companies such as Amazon.com, Google and Meta Platforms.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,
