👉 Background: Nvidia started building graphics cards for gamers back in the early 90's so they could indulge in hours of Mortal Kombat. But, over the past decade, it has grown to dominate the global AI hardware market. Get this: just two years ago, Nvidia had $27 billion USD in annual sales and is now it's pushing towards $200 billion USD — a nearly 8x jump.

👉 What happened: Despite the US government banning Nvidia from selling its best-quality chips to China, it didn't stop Nvidia from reporting a very chirpy revenue forecast for the upcoming quarter. In fact, Nvidia is forecasting $70 billion USD for the quarter, which was above investor expectations.

👉 What else: While Nvidia is being squeezed out of China, other policy changes may help open up new markets, like the Middle East. And, despite other AI chips being developed, Nvidia’s first-mover advantage has proven quite a benefit for them.

‍

What's the key learning?

‍

💡First-mover advantage is the competitive edge that a company gets by being the first major player in a new or untapped market. While others were still focused on traditional CPUs (ahem Intel), Nvidia developed GPU-based AI chips.

💡As a result, Nvidia owns around 90% of the AI accelerator chip market and it has become the go-to provider for companies building AI models. That head start means Nvidia can effectively set the standards in the industry and also set pricing, which is at a premium.

💡But first-mover advantage doesn’t always have a lasting impact. While Google has around 90% market share in the Search market, it only entered the search industry five years after it was invented. So while Nvidia has cemented its dominance for now, you can bet your bottom dollar others will be chasing.