Chief executive of the world’s leading chip maker Nvidia says that artificial intelligence (AI) has reached a global tipping point, as revenues soar.
California-based Nvidia is responsible for more than 70 per cent of AI chip sales, with an even larger hold on training generative AI models. With the AI boom still in full flow, the company posted a barnstorming set of quarterly earnings yesterday. Revenues rose by a whopping 265% to reach $22bn between October 2023 and January 2024, compared to the year before.
For 2023 as a whole, turnover reached over $60bn. At the same time, Nvidia became one of the most valuable companies in the United States, with its stock market value rising by 225% over the 12 months – although that stock has recently started to fall.
Nvidia chief executive Jensen Huang attributes the success to the continued rise of AI, saying on Wednesday (Feb 21): “Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations.”
The boom isn’t showing any signs of slowing down either, with Nvidia predicting a 233% jump in its quarterly revenues for the current quarter – higher than analysts’ earlier predictions from last year.
Over the past year, the company’s stock price has risen over three times its previous value, boosting Nvidia’s total market capitalization to surpass the $1.5 trillion mark (one of only seven trillion dollar companies in the world) and making it the flagship AI stock with retail and institutional investors.
Challenges to Nvidia’s AI growth
However, that’s not to say it’s all without its own challenges. Supply chain issues and strained relations between China (the second-largest global economy) and the US are among some of the main obstacles that Nvidia has described.
In addition, with more and more companies wanting to tap into the emergence of AI, more competition will enter the market, presenting new challenges to the market leader. While Nvidia has dominated in the early stages of the AI market, it will also need to defend its place as top dog as more companies enter the field.
“Nvidia… will see challenges on the way up because first the revenue growth will likely stabilise and the euphoria regarding these growth and growth perceptions will level out,” Ipek Ozkardeskaya, a senior analyst at Swissquote told the BBC, adding that Nvidia might be “constrained by their own capacity to respond to this fast-surging demand”.
Featured image: DALL-E
