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Jensen Huang shares NVIDIA’s philosophy

In a speech at the National Taiwan University over the weekend, Jensen Huang shared the philosophy that just delivered his company a $1 trillion market capitalization today. “Run, don’t walk,” he said. “Either you are running for food, or you are running from becoming food.”

Huang’s urgency — and his willingness to take risks that other rule-by-committee businesses dare not — is what compelled NVIDIA Corp., the Silicon Valley chipmaker he founded 30 years ago, to make big bets on artificial intelligence years before anyone else was taking it seriously. Today, it’s proving to be the company’s golden goose: The Silicon Valley firm surpassed $1 trillion in market value on Tuesday, joining a handful of companies including Alphabet Inc., Inc. and Apple Inc. to be valued that high.

Fewer than 10 companies globally have achieved this level.

Not everyone is bullish. In an interview on Bloomberg TV on Friday, Cathie Wood, whose flagship ARK Innovation ETF fund cut its holding in NVIDIA in January, warned that the computer-chip industry’s boom-bust cycles pose risks. “There are a few reasons we take some pause,” she said, with competition growing among firms for a piece of the AI market. She called NVIDIA a “a check-the-box stock.”

Hype or not, no other company embodies Wall Street’s current obsession with AI more than NVIDIA. It has become the world’s biggest maker of the specialized chips needed to power a new generation of AI products, surpassing Advanced Micro Devices Inc. and Intel Corp. in capability just as the viral success of ChatGPT has virtually every company around the world baking AI into its operations.

NVIDIA is “in the pole position right now,” Zeno Mercer, senior research analyst at ROBO Global, said. “It is actually providing the tech needed to service this wave of innovation and utilization.”

NVIDIA’s shares have soared since last week when it gave an AI-fueled sales forecast that shattered Wall Street’s estimates. It was up 4.3% in New York on Tuesday, after announcing several new artificial intelligence-related products over the weekend that touch on everything from robotics to gaming to advertising and networking. Huang also unveiled an AI supercomputer platform that will help tech companies create their own versions of ChatGPT.

“It’s too much,” Huang said during his presentation of the platform in Taiwan. “I know it’s too much.”

Huang has a knack for riding tech trends — selling graphics chips that powered everything from the video game boom to the rise of cryptocurrency and the industry’s big bet on the metaverse. But arguably no trend stands to benefit his company, today the world’s most valuable chip company, more than the rise of artificial intelligence.

Last week, the company issued an AI-fueled sales forecast of $11 billion in the fiscal second quarter, blowing Wall Street targets out of the water and growing its value by $184 billion in a single day.

“We have never seen a guide like the one NVIDIA just put up,” Sanford C. Bernstein analyst Stacy Rasgon said at the time.

NVIDIA was co-founded in 1993 by Huang. It proved more successful than its peers at developing chips that turn computer code into the realistic images that computer gamers love, and rode out a wave of consolidation that saw its rivals acquired, bankrupted or merged into larger companies.

Under Huang, the company then pushed its technology into new markets, such as data center servers and artificial intelligence processing — a move that’s proving prescient today. In less than a decade, NVIDIA’s data center business has grown from $300 million in annual revenue to $15 billion. The chipmaker has won orders to equip giant computing factories by successfully arguing that graphics chips can handle AI workloads better than more standard processors.

It’s become commonplace for tech companies to talk up their artificial intelligence prospects during earnings conference calls. References to AI soared after the launch of ChatGPT in November, and they don’t always spark a stock rally. But NVIDIA has now become the model of a company that’s actually making money from AI. It’s the seller of picks and shovels in the gold-rush analogy.

NVIDIA’s success has made investors even gloomier about Intel, a Silicon Valley pioneer and the company most synonymous with computer chips. While many chipmakers saw their stocks gain in the wake of NVIDIA’s blockbuster earnings last week, Intel actually fell. NVIDIA’s valuation is now more than eight times that of Intel, despite the company having far less revenue. Bloomberg

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