February 28, 2024

Jensen Huang, CEO of Nvidia, shows the NVIDIA Volta GPU computing platform at his keynote address at CES in Las Vegas, Nevada, U.S. January 7, 2018

Jensen Huang, Nvidia’s CEO.
Photo: Rick Wilking (Reuters)

Nvidia—which roughly translates to “envy” in Latin—has been having its AI moment. The chip maker’s stock is up almost 30% year-to-date, closing at $624.65 on Monday.

Microsoft and Meta are the biggest spenders on the company’s H100, the coveted $30,000 chip that powers generative AI products. Microsoft and Meta, together, spend $9 billion on chips alone. But these buyers are also building their own AI chips, which raises questions about Nvidia’s long-term revenue growth.

Though tech companies have been quick to announce new AI assistants and more, Nvidia is one of the few actually making money from generative AI. In the three months ending last Oct. 29, its revenue more than tripled from the same period in 2022.

Tech giants have their own AI chips

But other technology players are catching up to Nvidia.

At least four tech giants—Microsoft, Google, Amazon, and Meta—revealed their own AI chips last year, with some still in development. This enables them to reduce their reliance on Nvidia and slash the cost of developing AI models.

Nvidia also faces growing competition from chipmakers like AMD and Intel.

Will Nvidia’s boom last?

For Nvidia to sustain its current revenue trajectory, large customers of its computing and networking business would have to boost their capital spending with the chip maker. If not, other clients would need to spend enough on data center hardware and other equipment to make up for any shortfall by Big Tech firms.

Nvidia’s stock closed up 2.3% on Monday, to $624.65 per share.

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