Why are Nvidia shares soaring and what is its role in the rise of AI?

Nvidia Corp neared a trillion-dollar market value on Thursday as shares rose 25% following a roaring earnings report that forced Wall Street to reassess the potential windfall for the chipmaker from of a boom in artificial intelligence.

Here’s an explanation about Nvidia and its role in the rise of AI.

HOW BIG IS NVIDIA IN TERMS OF MARKET VALUE?

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 SHIFT OF APPROACH

Nvidia, known for its chips used in video games, has turned to the data center market in recent years.

The company’s business expanded rapidly during the pandemic as gaming took off, cloud adoption increased and cryptocurrency enthusiasts turned to its chips to mine coins.

The data center chip business accounted for more than 50% of the company’s revenue in the fiscal year ended Jan. 29.

WHY IS GENERATIVE AI A HOT TOPIC?

The viral chatbot, ChatGPT, has made generative AI a buzzword this year. The technology uses a large amount of pre-existing data to create new content ranging from poems to images and even computer code.

Microsoft Corp and Google, owned by Alphabet Inc, two of the biggest players in the space, believe that generative AI can change the way work gets done. The two have been quick 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 approach 1% of the country’s economic output by 2030.

WHAT IS NVIDIA’S ROLE IN THE AI BOOM?

The big computers that crunch data and power generative AI run on powerful chips called graphics processing units (GPUs).

Nvidia produces about 80% of the GPUs, according to analysts.

GPUs are designed to handle the specific type of math involved in AI computing very efficiently. By contrast, generic central processing units from companies like Intel handle a broader range of computing tasks less efficiently.

OpenAI’s ChatGPT, for example, was built on thousands of Nvidia GPUs. Tesla CEO Elon Musk has also sourced GPUs from Nvidia for his AI startup, the Financial Times reported in April.

WHO ARE NVIDIA’S RIVALS IN THIS MARKET?

Nvidia’s main competitors include Advanced Micro Devices and AI chips made in-house by companies like Amazon.com, Google and Meta Platforms.

(This story has not been edited by News18 staff and is published from a syndicated news agency – trendswire)