what is Nvidia, this tech giant that is breaking stock market records?

Little known to the general public, the Californian company manufactures semiconductors and is riding the wave of artificial intelligence, to the point of matching and even surpassing companies like Google or Amazon on the stock market.

A concert hall atmosphere. In front of an audience of enthusiastic developers, the American group Nvidia presented at the SAP Center in San José on Tuesday, March 19, its latest, more efficient and faster chips used for generative AI, including a much more efficient one, called Blackwell.

The Santa Clara group wants to continue to dominate the market for artificial intelligence chips for data centers and break stock market records. The Santa Clara group has overtaken Amazon in terms of market capitalization. On February 23, it even crossed the symbolic threshold of 2,000 billion dollars in valuation, an altitude that only Microsoft, Apple and the oil company Saudi Aramco have known.

The group, founded by three engineers in a fast-food restaurant on the west coast of the United States, is one of the “Magnificent Seven”, alongside Tesla and the famous Gafam (Google, Amazon, Facebook, Apple and Microsoft). Among these tech giants, the company Nvidia may appear as an intruder: it does not sell smartphones or electric cars and does not have a social network or e-commerce site.

High-performance chips

The company is a semiconductor manufacturer. Little known to the general public, its name comes from the Latin “invidia”, meaning “desire”, remains widespread in the gaming community, particularly on PC. Because in its early days, Nvidia’s core business lies in graphics chips, GPUs (for Graphics Processing Unit, in English), present in our computers and our game consoles. But the computing power of GPUs is not only used for processing the graphics of our video games.

Nvidia’s chips are considered to be the most efficient and the most capable of processing generative AI type requests, that is to say an artificial intelligence system to create new content such as text, images, etc. audio or videos. “What has really made Nvidia emerge over the last 18 to 24 months is really the whole trend around ‘super computing’ which will be used for AI”explains Martin Vielle, partner at Clipperton, an investment bank specializing in new technologies.

A major part of data centers

These chips are therefore found in data centers, belonging in particular to Gafam which have invested massively in AI. In 2022, the majority of its turnover is linked to its activity in data centers, exceeding its historical activity in video games, underlines The echoes. In a quasi-monopoly position in its field, the company benefits from the strong development of technologies around artificial intelligence. And “the underlying trend is towards a very strong increase in computing power requirements”estimates Martin Vielle, who underlines the absence of a major European player in this race for semiconductors and computing power.

It remains to be seen whether the company will be able to maintain its impressive growth rate. Without forgetting the colossal energy requirements, this technology remains expensive to develop. “Today, the cost of the semiconductor is very high and it must be amortized accordingly for it to be economically viable”, explains Martin Vielle. He takes the example of ChatGPT: the application became paid because “it costs them too much to process all the requests”.