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Nvidia is the hottest company on Wall Street right now. Its shares are up over 198% year-to-date, a rally that gives the company a market capitalisation over $1 trillion. This is a title only four other American companies currently claim.
Nvidia's story goes back 30 years to a dinner meeting organised by CEO Jensen Haung at a Denny's in San Jose. He discussed the need for better computer graphics. Nvidia would go on to design the chips to make it happen.
The company's early success was driven almost entirely by video games. Unlike its competitors, Nvidia's GPUs could handle multiple computations at once. Over time their chips were also used by animators and graphic designers. Decades later crypto mining exploded, resulting in huge demand for Nvidia chips.
The latest surge in demand for Nvidia chips is networking (think datacenters). This was aided by their 2019 $6.9 billion acquisition of Mellanox. Today Nvidia controls 78% of the networking industry and 80% of the overall specialist chip market.
With the rise of AI and its massive need for computing power, investors are betting that Nvidia will remain the clear leader. For example, OpenAI required 10 000 Nvidia GPUs to create ChatGPT.
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