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· Posted on
February 21, 2024

Nvidia is NOT playing games anymore as its gaming chips are key to the AI gold rush

Nvidia's sales grew 19% quarter over quarter, thanks to demand for its data-center chips for cloud and AI.

What's the key learning?

  • Thanks to the demand for its chips, Nvidia expects higher revenue, its stocks jumped, and now it's the 5th most highly-valued company in the US.
  • Being the pick or shovel in a gold rush is often a more reliable business model than the chance of striking gold.
  • Nvidia’s chip has become the gold standard used in large, AI language models.

👉 Background: Nvidia was founded back in 1993 with the goal of creating GPU computer chips. It started out building gaming chips for PC’s to enhance gaming graphics (think: the chips in Nintendo Switch).

👉 What happened: But over the past 10 years, Nvidia has also been building its AI-chip muscles. Now, Nvidia's sales grew 19% quarter over quarter thanks to demand for its data-center chips for cloud and AI.

👉 What else: But the best is yet to come. Nvidia expects revenue to be 50% higher in the upcoming quarter thanks to demand for its chips. After the news, Nvidia’s stock jumped 25%, which now makes it 5th most highly-valued company in the US.

What's the key learning?

💡 Being the pick or shovel in a gold rush is often a more reliable business model than the chance of striking gold.

💡Nvidia's chip technology across gaming, cars and now AI has made it a critical component in many industries. And now Nvidia’s chip has become the gold standard used in large, AI language models.

💡So rather than chase the gold itself like many other well-capitalised companies, Nvidia is providing the pick and shovel that enables the gold rush - and making the big bucks in the meantime.

‍

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