technology
As AI competition intensifies, Wall Street analysts predict that semiconductor company NVIDIA's revenue will more than double between 2023 and 2024, and nearly double again in 2025. Masu. This is an incredible growth rate.
NY post photo composite
Since the launch of Chat GPT in late 2022, AI (artificial intelligence) has taken the world by storm, shaking the windows and rattling the walls of every institution, from governments and universities to Fortune 500 companies and labor unions. doing.
While proponents argue that the system will usher in a new era of economic productivity, prosperity and human flourishing, detractors argue that the system will usher in a new era of economic productivity, prosperity and human flourishing, while detractors argue that the system will disrupt the labor market for everyone from call center workers to Hollywood screenwriters. We fear that it will cause chaos and instability in all sectors of the world, exacerbate wealth inequality, and exacerbate wealth inequality. Millions of workers are on the streets.
Some AI doomsayers argue that artificial intelligence will become self-aware and turn against its human creators, like Skynet in The Terminator and other sci-fi films. Some people are concerned about this.
But what everyone seems to agree on is that AI will bring tremendous wealth to the companies and individuals who build and use the technology.
Nvidia, which makes the key computer chips powering the AI revolution, is a prime example of how companies can unlock billions, even trillions, of value in this new era.
Like AI itself, Nvidia is an overnight success story decades in the making.
Founded in 1993 by CEO Jensen Huang and co-founders Chris Malachowski and Curtis Priem, NVIDIA initially aimed to bring 3D technology to games and media.
In 1999, the company released the first-ever GPU (graphics processor unit), a powerful chip capable of rendering 3D graphics in real time.
The original Xbox game console and PlayStation 3 were powered by NVIDIA's powerful chip technology.
Nvidia chips have since become the backbone of blockchain networks like Ethereum, but until recently they required the significant computing power of GPUs to secure transactions and store data.
Nvidia was also a pioneer in building a software toolkit called CUDA that allows programmers to easily apply their chips to all kinds of tasks. It's like equipping a Formula 1 race car with an automatic transmission and cruise control.
Compared to traditional chips such as CPUs (the workhorse chips that have powered computers from 1950s mainframes to today's PCs and smartphones), GPUs are typically used for training AI models and Great for reinforcing responses to prompts.
That's because the so-called “machine learning algorithms” behind common AI models require computers to perform multiple tasks simultaneously.
Unlike CPUs, GPUs can split AI tasks into smaller chunks and run them simultaneously, significantly increasing speed and performance.
Think of the CPU as a decathlete competing in 10 different track and field events.
Like the CPU, decathletes can perform multiple tasks very well, but only in sequence. You cannot take shots into the swimming pool.
GPUs, on the other hand, are like soccer teams.
Each athlete may not be as versatile or even as fast or strong as a decathlete.
But together they accomplish what decathletes could never do: work as a team to advance the ball up the field and score.
Currently, GPUs are the primary chips for AI, and Nvidia is a major player.
According to Mercury Research, in the third quarter of 2023, NVIDIA sold $11.1 billion in chips, cards, and related hardware, and had a 99.7% share of GPU systems in data centers worldwide.
So was Nvidia lucky to develop a best-in-class GPU at exactly the time it needed to power the AI revolution?
CEO Jensen Huang said in a March 2023 interview that 10 years ago, “we had good wisdom to push the whole company.” The reality is somewhere in between. At the end of the day, luck is a combination of preparation and timing.
When Nvidia released its first AI product in 2012, few could have predicted that a decade later AI would become the phenomenon it is today.
On the other hand, if the company hadn't started investing in AI long before its peers, it wouldn't have been able to seize this moment.
Other chipmakers like Intel could have been better prepared for the AI era, but they simply didn't.
From 3D graphics to PC gaming to blockchain to AI, NVIDIA is often at the forefront of the biggest paradigm shifts in technology. And this was a historic windfall for shareholders.
On the day Chat GPT launched in November 2022, NVIDIA was a $400 billion company. It was still a huge company at the time, thanks to its successful gaming and graphics business.
But since then, its market value has ballooned to an astonishing $1.4 trillion in just over a year, a market capitalization equivalent to about four Bank of Americas companies.
Much of that is driven by high expectations that the company will continue to grow at breakneck speed.
Wall Street analysts expect the company's sales to more than double from 2023 to 2024 and nearly double again in 2025.
Such growth for such a large company is almost unprecedented.
This raises several questions.
First, is such growth actually achievable?
If so, won't other chipmakers compete to develop an Nvidia killer?
It would be a mistake to think that Nvidia is investing in AI alone.
In fact, more than a dozen other companies are crowding the market with their own products, including traditional chipmakers like AMD, Intel, and IBM, as well as lesser-known startups like Graphcore and Groq.
Additionally, major technology platforms with huge computing needs are developing their own chips.
For example, Google Cloud TPU (Tensor Processing Unit) was launched in 2015 and updated in 2021.
It currently powers Google's Bard chatbot and many of the company's other AI applications.
Amazon, the world leader in cloud computing (data centers that serve the computing needs of companies from Pfizer to McDonald's), launched an AI-focused chip known as Tranium/Inferentia in 2020 .
Chinese technology conglomerate Alibaba announced its own AI chip, Hanguang 800, in 2019.
As industry analyst Ben Bajarin I wrote to X Shortly after Microsoft announced its own AI hardware product, it said, “If you're serious about platform, you need to be serious about silicon.''
Nvidia is swimming in a pond with many other powerful companies full of smart people and seemingly limitless resources. Once you reach 100% market share (99.7% in the case of his Nvidia GPU share in data centers), you're not going anywhere. But down.
Still, it would be a mistake to simply think that traditional players and Nvidia's customers will be able to put in enough money to compete with Nvidia without a fight.
Moreover, if AI predictions are correct, AI chips will power a whole new industrial revolution, allowing Nvidia to succeed even in the face of increased competition.
In 1919, when half of the cars on the road were Model Ts, Henry Ford, despite a steady decline in market share and competitors consolidating and imitating his methods. It sold far more cars in 1929 than in 1929.
Although his market share decreased, his total sales increased and the value of his company increased.
The same thing could happen with Nvidia. After all, they not only make money from his AI. Last year, the company generated about $12 billion from non-AI products.
Still, Nvidia's long-term success is not guaranteed.
Fairchild Semiconductor was once the standard bearer of American innovation.
It supplied many of the chips for the Apollo Lunar Guidance System.
Its success transformed California's quiet valley of apple orchards into Silicon Valley and the center of the world's technology industry.
Now Fairchild no longer exists. For a time in the 1960s and 1970s, Digital Equipment Corp (DEC) was the world's largest computer company, developing so-called “minicomputers,” which were then eclipsed by the rise of the personal computer, or PC. .
In 2007, Nokia sold one in two mobile phones worldwide.
The iPhone was introduced in the same year. Currently, Nokia accounts for only 3% of total sales.
And let's not forget about Blackberry. do you remember?
The only constant in technology is change. Nvidia's future success will depend on its ability to successfully navigate that change.
Alex Tapscott is a Managing Director in the Ninepoint Digital Asset Group at Ninepoint Partners. Book “Web3: Charting the Internet's Next Economic and Cultural Frontier”
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