Nvidia rides AI wave to $1T market cap, unveils new supercomputer to succeed ChatGPT

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While OpenAI, Microsoft (NASDAQ: MSFT), and Google (NASDAQ: GOOGL) have grabbed the headlines for the recent surge in artificial intelligence (AI) popularity, Nvidia (NASDAQ: NVDA) is emerging as the biggest winner of the AI boom. The company recently joined the $1 trillion club as revenue forecasts for the second quarter exceeded estimates, while also announcing a new supercomputer to develop a successor for the popular ChatGPT chatbot.

Nvidia CEO Jensen Huang unveiled the new supercomputer in Taiwan. Known as the DGX GH200, it comes equipped with nearly 500 times more memory than existing systems. The chipmaker will avail the supercomputer to AI pioneers, including Google, Meta (NASDAQ: META), and Microsoft.

DGX GH200 is the biggest leap in a rapidly evolving sector after the mega success of OpenAI’s chatbot ChatGPT. The supercomputer is expected to offer up to one exaflop of performance, equating to the ability to crunch one quintillion—or 1,000,000,000,000,000,000—calculations per second.

Nvidia expects to launch the supercomputer by the end of the year, and according to the CEO, it will be the foundation for the development of a successor to ChatGPT. The chatbot was the first to go mainstream and racked up 1.8 billion views in April. It hit 100 million active users in two months, the fastest for any platform in the internet era.

However, ChatGPT is expected to face increasing competition in the space from Big Tech, with Google, Meta, Amazon (NASDAQ: AMZN), and even Apple (NASDAQ: AAPL) working on their own large-language model AI systems.

AI pushes Nvidia to the $1 trillion club

Whether it’s ChatGPT, Google’s Bard, or a new startup that rules the AI space, the big winner is Nvidia. The chipmaker is the undisputed leader in chip supply for AI models globally, with a market share estimated at 80% (some say 95%).

The California company recently hit $1 trillion in market cap as its revenue forecasts exceeded market estimates by over 50%. Nvidia is now Wall Street’s fifth-largest company after Apple, Microsoft, Google, and Amazon.

The company announced that it expects to rake in $11 billion in revenue in the second quarter against analysts’ prediction of $7.15 billion, a spike that some analysts described as “unfathomable” and “cosmological.”

“We view Nvidia as the most important company on the planet in an era that is rapidly changing towards one that will be emphasized by greater AI capabilities,” Angelo Zino, an analyst at CFRA Research commented.

With AI chips in high demand for the foreseeable future and Nvidia’s foray beyond GPUs and into the Intel-dominated CPU business, the chipmaker’s prospects have never been brighter. Tesla (NASDAQ: TSLA) CEO Elon Musk recently commented that in today’s market, GPUs are “considerably harder to get than drugs.”

“…we think Nvidia has the earnings firepower as the adoption of its AI GPU remains in the very early innings,” commented Kinngai Chan, a senior analyst at Summit Insights Group.

Nvidia’s biggest headwind will be the advancing chip development by Big Tech which could cut off the reliance on the chipmaker. Microsoft is reported to be advanced in its chip-building project codenamed Athena. Google is also working on its in-house chips, while Amazon has already been deploying its chips alongside Nvidia’s to cope with the shortage in recent months.

Nvidia’s success is also a testament to its ability to ride any new wave in the tech industry. It was a leading player in the BTC ASIC mining chip production before swiftly shifting to the metaverse.

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