First company with a market capitalization of $1 trillion
NVIDIA has been growing steadily for a long time. It recently became the first chip manufacturer in the world to have reached a market value of $1 trillion. The global chipmaker has also been improving its position against its competitors Intel and AMD, whose market dominance has declined considerably in the last few years. NVIDIA is expected to continue its winning streak, which will be evident in its fiscal 2023 earnings results [1]. This is evidenced by the company's value increasing by more than 191% since 1st January 2023 Since the beginning of the year, NVIDIA's stock has increased 136 percent. *
Chart: Nvidia's stock performance in the last five years (Source Tradingview.com)*
Constant innovation
NVIDIA has been focusing on the AI solutions market. To keep up with the ever-increasing requirements for computer chip performance, it must continually invest in new technologies. It will spend $7.3 billion on research and development in 2022[VZ1] . As a proportion of revenue, this represents an incredible 27%, which puts it second just behind Meta Platforms (Facebook).
The company regularly delivers innovations such as Nvidia Workbench, the latest interface developed specifically for developers, or the Nvidia ACE solution for game consoles providing advanced character animation. The company has also recently announced the fourth iteration of its Nvidia AI Enterprise software platform, which takes so-called generative AI capabilities to higher level for enterprise customers. It simplifies their ability to create and deploy large-scale language models (LLMs) such as ChatGPT or Google Bard.
NVIDIA is showing best results in independent tests
The investment in development and the successful evolution of new technologies is positively reflected in independent tests. NVIDIA has achieved the best results in neural network chip speed this year as well as in previous years. Competitors such as Google, Graphcore and Advanced Micro Devices did not enter the independent tests this year and thus NVIDIA's dominance in all eight tests was impressive.
The competition is on its heels
The competitor Intel is working hard on a so-called cluster of several thousand chips based on its Gaudi AI system. The success of this project could potentially affect progress of NVIDIA in this segment and weaken its position, while the company also faces uncertainty due to the U.S.-China tech war. The Biden administration is considering extending restrictions on the supply of certain technologies to Chinese telecommunications giant Huawei Technologies Co, which was blacklisted by the US State Department in 2019. Such a possible restriction would involve technologies developed by NVIDIA. For the time being, though, the company's position in the market is clear, and there is no indication that it could change anytime soon.
*Past results are no guarantee of future results.
[1] Forward-looking statements are based on assumptions and current expectations, which
may be inaccurate, or based on the current economic environment, which may change. Such
statements are not guarantees of future performance. They involve risks and other
uncertainties that are difficult to predict. Results may differ materially from those expressed
or implied by any forward-looking statements.
Resources:
https://www.nytimes.com/2023/03/31/business/huawei-annual-earnings-2022.html
[VZ1]2023?
