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Business News/ Markets / Stock Markets/  Nvidia Mcap nears $1 trillion: Top 5 things to know about the US chipmaker

US chipmaker Nvidia is close to joining the exclusive club of $1 trillion companies like Alphabet, Apple and Microsoft after blowing past Wall Street's quarterly sales forecast due to a surge in demand of artificial-intelligence (AI) chips - widely used to power ChatGPT and other such devices. 

Nvidia's share price has witnessed a sharp rally of more than 24 per cent since last Thursday, and the firm is now commanding a market capitalisation (Mcap) of $963.18 billion - extending the company's lead as the world's most valuable chipmaker and Wall Street's fifth-most-valuable company.

The maker of graphics chips for gaming and artificial intelligence reported a quarterly profit of more than $2 billion and revenue of $7 billion, both exceeding Wall Street expectations. Analysts reckon that Nvidia is bound to become a megacap to join the likes of Facebook, Apple, Amazon, Netflix, and Alphabet - often abbreviated as FAANG stocks. 

Here are the top things to know about the Santa Clara, California-based chip giant that has sent ripples across the gaming and AI industry:


Nvidia's origin

Nvidia's first seed was sown in 1993 at a Denny's restaurant where founder Jensen Huang was meeting with two friends, Chris Malachowsky and Curtis Priem, according to a September 2020 report in the Wall Street Journal.

His friends were with their work at the time, and the three "wondered whether starting a graphics company would be a good idea," Huang told Stanford University's engineering school in a 2010 interview. "We brainstormed and fantasized about what kind of company it would be and the world we could help. It was fun," he told Stanford. Denny's was also where Huang part-timed when he was a student, according to a New York Times 2010 interview.


Nvidia's AI boom

Nvidia has strained to meet demand for its AI chips, with Tesla Inc Chief Executive Officer Elon Musk, who is reportedly building out an artificial-intelligence startup, earlier this week telling an interviewer that the graphics processing units (GPUs) are "considerably harder to get than drugs,'' according to a Reuters report. 

Nvidia's chief executive officer Jensen Huang unveiled a new batch of products and services tied to AI, looking to further capitalise on the frenzy that resulted his wealth to soar by almost $7 billion billion last week to hit nearly $35 billion. 

Nvidia is teaming up with WPP Plc to use AI and the metaverse to lower the cost of producing advertising. It’s releasing a networking offering that’s designed to turbocharge the speed of information within data centres. The company is even looking to change how people interact with video games: A service called Nvidia ACE for Games will use AI to enliven background characters and give them more personality.


ChatGPT effect

The wide-ranging new lineup includes an AI supercomputer platform called DGX GH200, which will help tech companies create successors to ChatGPT, Huang told the audience at the Computex show in Taiwan. Microsoft Corp., Meta Platforms Inc. and Alphabet Inc.’s Google are expected to be some of the first users of that equipment.

The DGX computer is another attempt to keep data center operators hooked on Nvidia’s products. Microsoft, Google and their peers are all racing to develop services similar to OpenAI Inc.’s ChatGPT chatbot — and that requires plenty of computing horsepower. To satisfy this appetite, Nvidia is both offering equipment for data centres and building its own supercomputers that customers can use.


ACE offering for gamers

Nvidia’s original business was selling graphics cards to gamers, and it is returning to that world with the Avatar cloud engine (ACE) offering. The service will address the problem of NPCs, or nonplayer characters, the background figures that populate video games. NPCs typically give repetitive responses with scripted dialogue.

Nvidia ACE will listen to what the gamer says to a character, convert into text and then dump that into a generative AI programme to create a more natural, off-the-cuff response. The company is currently testing the service and will add guardrails to ensure that responses aren’t inappropriate or offensive.


Infotainment for cars

Nvidia Corp and MediaTek Inc announced that they will collaborate on technology to power advanced vehicle infotainment systems that can stream video or games or interact with drivers using artificial intelligence.

Under the agreement, announced at the Computex technology trade show in Taipei, MediaTek will integrate an Nvidia graphic processing unit chiplet and Nvidia software into the system-on-chips it supplies to automakers for infotainment displays.

MediaTek systems using Nvidia software would be compatible with automated driving systems based on Nvidia technology, the companies said. Dashboard displays could show the environment around the vehicle, while cameras would monitor the driver.


With inputs from Bloomberg and Reuters

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Updated: 29 May 2023, 09:25 PM IST
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