All hail Nvidia, king of the markets

Nvidia just had the type of earnings call that makes investors’ eyes pop out of their sockets like a cartoon wolf. 

What happened: The chip designer shattered estimates by reporting a 265% surge in quarterly revenue and a 769% increase in its net income, as demand for its industry-leading AI chips continues to soar. You don’t need a six-figure MBA to know that that’s very good. 

Catch-up: Nvidia has been on a bull run since May of last year after big investments in AI by tech giants helped boost sales to unprecedented levels. Since that moment, shares have surged ~120%. This year, it became the third-largest U.S. company and the most-traded Wall Street stock.

Why it’s happening: Nvidia has been perhaps the biggest beneficiary of the AI boom. The company’s graphic processing units (GPUs) — originally built to make video games run smoother — are the go-to choice for powering large-language generative models (LLMs).

  • The equation-solving capabilities that made Nvidia’s chips great for high-resolution video game graphics also made them ideal for machine learning

Why it matters: How important is Nvidia to the companies making AI? Research last year estimated the company accounts for over 70% of all AI chip sales, with an even bigger stronghold on training generative AI models thanks to its vast array of software and services. 

Big picture: Investors have piled into AI to keep the tech sector … heck, to keep the markets in general, afloat. One Goldman Sachs analyst called Nvidia the most important stock on Earth, which is concerning to those who see generative AI as one big bubble

What’s next: Investors are split on whether Nvidia can possibly grow further. Regardless, Nvidia will remain top dog until a competitor steps up — like AMD, which has rolled out new LLM-focused chips — or Big Tech companies can efficiently produce chips in-house.—QH