The shares of AI chip giant Nvidia reached a record high yesterday (June 25), surpassing its previous record set in January.
Shares closed last night at $154.31 after a 4.3 percent hike, increasing the tech giant’s market cap to $3.77 trillion.
Nvidia is the richest company in the world, just ahead of Microsoft which has a market cap of $3.66 trillion.
The news indicates a swift shift for the AI hardware firm, after an uncertain start to the year following restrictive US sanctions to China – prohibiting the company from shipping out its China-specific AI chips.
These chips accounted for roughly 12.5 percent of Nvidia’s revenue, and the firm reported a $2.5 billion loss in last quarter and projected $8 billion loss in the upcoming quarter because of the restrictions.
Nvidia’s Market Dominance
Nvidia has a near monopoly in the AI chip marketplace.
Most large scale AI training happens on Nvidia GPUs (Graphics Processing Units), plus its chips – particularly A100 and H100 – dominate in performance for things like model training and providing query answers.
Nvidia’s software ecosystem CUDA (Compute Unified Device Architecture) is proprietary to the company and only runs on its own GPUs, meaning it’s tightly paired with Nvidia hardware.
The world’s biggest tech giants, including Microsoft, Google parent company Alphabet, Meta, and Amazon, are all customers of Nvidia, and account for 40 percent of its revenue.
Through these partnerships, Nvidia products have been deeply integrated into large enterprises, with most large scale AI training happening on Nvidia GPUs.
Nvidia’s record share prices are an indicator of all these factors, and a byproduct of the significant hype and investment around AI in recent years.
