Introduction to AI and Nvidia
For all trillions spent on the development of artificial intelligence (AI), the existential question still cannot be answered: Is AI a truly transformative technology, similar to the railways or a bubble that will burst, taking global markets with it? In the absence of a final digitally generated answer, the performance of chip maker Nvidia is a good proxy.
Nvidia’s Growth and Connection to AI
The growth of Nvidia is fundamentally connected to AI. It has developed its name through the development of graphics processing chips (GPUs) that drove gaming, and earned $9 billion in 2022. A decent sum, which was soon overshadowed as CEO Jenson Huang discovered the potential of his GPUs in emerging AI technology and threw the entire company behind its development. This was truly transformative.
Nvidia’s Evaluation and Market Value
After ChatGPT was provided for large language AI models (LLMs) in early 2023, Nvidia’s evaluation has been swung, and its market value has already increased by 35% this year, reaching $4.4 trillion. This is twice as high as the value of each company in the FTSE100 and 25% larger than the entire British GDP.
Expectations and Market Reaction
With stratospheric reviews, however, there are similarly high expectations, which explains why the markets were initially not agreed and the expectations in the second quarter were not met, with revenue of $26.4 billion and a profit of $4.2 billion, compared to expectations and an increase of more than 50% compared to the previous year. The Nvidia shares fell 3% in post-close trade.
Access to Chinese Markets and Future Prospects
This feeling may not last, but could be explained by questions about Nvidia’s access to Chinese markets, which were blocked by Donald Trump until recently. Huang has concluded a contract with the US President to hand over 15% of his sales to Beijing, but Nvidia is neither booking nor predicting Chinese income until its next update. Despite the noise, Nvidia believes that it is still a lot to walk and for good reason.
AI Investments and Corporate Landscape
The mood for AI has also shifted in the past few months. In a recent report by the Massachusetts Institute of Technology, evidence of sensible returns for AI investments showed, although the corporate landscape has enormous expenses. After OpenAI’s ChatGPT-5 started lukewarm reviews, his founder Sam Altman, one of the greatest beneficiaries of the hype, wondered whether the market was overheated.
Conclusion and Future of AI
Despite the noise, Nvidia believes that it is still a lot to walk and for good reason. Tech giants Google, Microsoft, Meta, and Amazon, and many others, all follow the potential of AI, maybe what it could ultimately deliver, but desperately trying to find out. This impulse has enormous investments in hardware, with more than $41 billion from Nvidia’s Q2 revenue coming from the sale of data center devices, and forecast in the AI infrastructure until the end of the decade. If something is realized in this scale, Nvidia and Jenson Huang will continue to win.
