Name a major tech brand – from Google to Amazon to Tesla to ChatGPT – and chances are Nvidia is involved in some way.
The company – which makes computer chips – may not be a household name in Britain, but it has just surpassed Microsoft and Apple to become the biggest. most valuable listed company in the world.
It is now worth more than $3.3 trillion (£2.6 trillion), with its share price rising by almost 600,000% since it first traded on the US stock market in 1999.
If you had invested €10,000 (€7,850) in the company at the time, the stock would now be worth more than €59 million (€46 million).
According to Forbes, Jensen Huang, the co-founder and CEO of Nvidia, has also seen his wealth rise to a whopping $119 billion (£93 billion).
But how did this all happen?
Next version jealous
Nvidia was founded in 1993 when Mr. Huang met two friends – all engineering graduates – at a Denny’s restaurant in California.
The multi-billionaire worked at a branch of the chain as a teenager after emigrating to the US from Taiwan with his family.
Video games were the initial focus of the trio, who wanted to create a computer chip that would allow PCs to display “realistic” 3D graphics.
Mr Huang, 61, said the 24-hour restaurant was an ideal meeting place because it had “all the coffee you could drink and no one could rush you out”.
The caffeine-rich session spurred Mr. Huang, along with friends Chris Malachowsky and Curtis Priem, soon started working from an apartment in Fremont, California.
They came up with the name Nvidia by combining NV – which stands for ‘next version’ – with ‘Invidia’, the Latin word for envy.
The friends hoped to accelerate computing to such an extent that they would leave their rivals in the dust – a mentality that also inspired the company’s logo, with an envious “green” eye.
Nvidia’s logo features a ‘jealous’ green eye. Image: Reuters
Intelligent chips
In the 1990s, the computer chip market was dominated by companies such as Intel, a major producer of central processing units (CPUs), an important base for basic computer and software processes.
However, Nvidia managed to carve out a specialty for itself by focusing instead on graphics processing units (GPUs), which are an important element in computer games because they help display graphics.
The company built a reputation for revolutionizing electronic entertainment and went public in 1999.
Microsoft’s Peter Parsons plays the hit game Halo on the original Xbox console in 2001. Photo: Reuters
Nvidia’s early success included the GeForce graphics card, which can be connected to a PC to increase power.
Writer Stephen Witt said the device’s early popularity was mainly driven by the Quake series of first-person shooter games.
The company soon achieved another coup when it signed on to become the exclusive graphics supplier for Microsoft’s first Xbox gaming console in 2000.
However, it soon became apparent that the company’s GPUs could also be useful beyond shoot ’em ups, platformers and role-playing games.
Smart bet
Engineers realized that the chips could perform calculations in ways that regular CPUs could not – making them more power efficient and better able to perform advanced computing tasks.
So by the mid-2000s, Nvidia began marketing its products to other types of technology companies, before expanding further by investing heavily in artificial intelligence (AI) in the 2010s.
One example was car companies, which quickly turned to the company for help with driver assistance software. The impact was so great that Nvidia’s hardware can now be found everywhere Tesla vehicles.
The company was also able to use its dominant and advanced position in GPUs to beat its rivals, producing its chips faster and in greater volumes.
An employee shows off Nvidia’s latest GeForce range at a computer trade show in Taiwan. Image: Reuters
However, it was the company’s early gamble with AI, for example by developing machine learning features in its products, that took it to the top.
Mr Huang told Sky News’ US partner NBC News in an interview last year: “We just believed that one day something new would happen, and the rest requires some serendipity.”
When asked whether the company’s subsequent success with AI was the result of luck or foresight, he replied, “It wasn’t foresight. The foresight was accelerated computing.”
Bryan Catanzaro, who started working on AI when he joined Nvidia in 2008, told NBC News: “For 10 years, Wall Street asked Nvidia, ‘Why are you making this investment? No one is using it.'”
From billions to trillions
The company’s journey to becoming the king of the stock market has not been without its challenges.
In 2010 it made an unsuccessful attempt to conquer the smartphone market – with Mr Huang admitting he had made “a lot” of mistakes over the years.
But by the time of the Covid-19 pandemic In 2020, companies began to increasingly turn to AI – and Nvidia’s bet began to pay off.
Among the companies using the technology was ChatGPTwhich was soon followed by a rush of imitators.
A Wall Street analyst told the New Yorker last year, “There is a war going on in AI, and Nvidia is the only arms dealer.”
Today, seemingly every major company in Silicon Valley, including Amazon, Google, Meta, and Microsoft, has leveraged its chips, and it is estimated that it controls more than 80% of the market for the technology used in AI systems.
Nvidia’s success has only increased in recent months. It reached a market valuation of $2 trillion in February and subsequently overtook Apple for the number two spot earlier this month.
It finally climbed to the top of the stock market on Tuesday, after adding more than $100 billion (£79 billion) to its market value in just one day.
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Analysts said demand was fueled by a stock split earlier this month, which created more shares and made them more attractive to individual investors.
While demand for Nvidia’s products currently exceeds supply, its top position will likely remain under threat in the coming months and years as companies like Microsoft invest heavily in AI in an attempt to catch up.