Nvidia Emerges as Top Chipmaker in AI Boom, Beats Wall Street Expectations with Quarterly Earnings

John Lopez, Tech Times 23 February 2023, 11:02 am

NVIDIA has just released its financial results for the fourth quarter and fiscal year of 2023. The company's fourth-quarter revenue was $6.05 billion, a 21% decrease from the previous year but a 2% increase from the prior quarter.

As the tech industry continues leveraging AI as an investment opportunity, Nvidia Corp is projected to become the most significant player among chipmakers, owing to years of being a go-to supplier for major tech companies.

Reuters points out that Nvidia's strong AI industry performance has attracted venture capitalists and startups looking to invest billions of dollars and encourage improvements such as lower power usage. None of them have significantly affected Nvidia's business thus far.

Nvidia Leads Chip, AI Race

Available data shows that Nvidia controls about 80% of the graphic processing units (GPUs) market. This makes the firm the leading supplier of specialized chips that provide the computing power required for services such as Microsoft-backed OpenAI's massively popular ChatGPT chatbot.

Graphics processing units (GPUs) are designed to efficiently handle the specific type of math involved in AI computing. In contrast, Intel's generic central processing units (CPUs) can take on a broader range of computing tasks with less efficiency.

Gartner predicts that by 2026, the proportion of data centers employing specialized chips such as GPUs will increase to more than 15% from less than 3% in 2020.

Advanced Micro Devices (AMD), the second-largest GPU manufacturer, has a roughly 20% market share. In recent years, AMD has invested significantly in artificial intelligence, including chips designed to compete with Nvidia's fastest hardware. On the other hand, Intel holds a market share of less than 1%.

"The enthusiasm around ChatGPT and the potential use case it unlocks likely represents an inflection point in the adoption of AI," said Lei Qiu, a technology fund portfolio manager at AllianceBernstein.

"While it is hard to pinpoint exactly how big AI is today as a percent of (Nvidia's) revenue, it has the potential to grow exponentially as large tech companies race to develop similar types of AI applications," Lei Qiu adds.

Nvidia Continues to Perform Well

On Wednesday, Feb. 22, Nvidia reported quarterly earnings and sales forecasts that exceeded Wall Street's expectations, starkly contrasting with rival Intel Corporation's projected loss and dividend cut.

On Thursday, before the opening bell, Reuters reported that shares of Nvidia climbed nearly 8%. Since the beginning of the year, their value has increased by more than 40%, nearly tripling that of the Philadelphia Semiconductor Index.

It is now the seventh-largest publicly traded U.S. company, with a market value of over $500 billion, roughly five times that of Intel.

In Other News

Microsoft's commitment to becoming the world's leading gaming company has been bolstered by signing a 10-year agreement with NVIDIA to bring Xbox games to the GeForce Now streaming service. Read more here.

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