NVIDIA is booming — Can it succeed in the long run?
Introduction
Artificial Intelligence has become a game-changer in our world today. Its ability to think and solve problems has allowed companies, industries, and even entire nations to operate more efficiently and make better decisions. Companies are now able to tackle complex issues and speed up their processes to get things done faster than ever before. The impact of AI on our world has been amazing, and there’s still so much potential for growth and innovation in this technology.
Tipping Point
Today, NVIDIA’s stock surged 16% when it shattered expectations in the fourth quarter. An earnings of 22.1bn was posted, compared to an expected 20.55bn. This caused investor optimism to skyrocket despite no major products being released by the company, causing such amazing momentum. Jensen Huang, CEO of Nvidia, has said that “Accelerated computing and generative AI have hit a tipping point”. This may not be true for all computer chip manufacturers, but NVIDIA has definitely reached a new high. The company has become the third largest in the world in the past few days.
Why NVIDIA?
NVIDIA is a company that manufactures computer chips. Not only that, but it also is a big player in the field of Artificial intelligence. With a 80 to 95% market share, the company has significant competitive advantages. It continues to advance its technologies and build new chips, as other companies lag behind. It also collaborates with other companies such as ServiceNow and Startup to expand the scope of their technology. The state-of-the-art technology they use in their software and chips allows them to stay ahead of their competitors and also has helped them build a good reputation amongst consumers. Thus, consumers are more willing to buy premium NVIDIA chips even if competitors offer cheaper options.
What’s next?
Despite the boom, there is some skepticism about the company. No stock goes up forever, and NVIDIA is no exception. As tech giants begin their own ventures for AI, the demand for chips from these companies as well as buyers could slow down over time. This has already been shown by the fact that wait times for the company’s GPUs(Graphics Processing Units) have shortened from 8–11 months to 3–4 months. Thus, the company may be surging in the short run, but it may not be as successful in the long-run.
Sources
https://www.theguardian.com/technology/2024/feb/21/nvidia-revenue-ai-artifiical-intelligence
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