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