Adam Lashinsky
It boggles the mind that a tech company that many people have never heard of is the most valuable corporation in the world. Having recently crossed the threshold of $4 trillion in market capitalization, Nvidia has doubled in value in just over a year. The reason? The Silicon Valley semiconductor company is the linchpin in the business of artificial intelligence that is rapidly remaking society.
If you cannot stand on one foot and explain what Nvidia is, as an editor once demanded I do on a different topic, don’t be alarmed. The TL;DR is that Nvidia makes chips that are considered crucial for building AI models behind everything from ChatGPT to customer-service bots and medical-imaging applications. Its designs are so in demand that other companies clamor for allocations in the face of scarcities. Nvidia’s co-founder and rock-star CEO, Jensen Huang, hobnobs one week in Washington with President Donald Trump and the next with Chinese Vice Premier He Lifeng in Beijing.
Obscurity partly explains its success. Nvidia spends little effort courting attention from ordinary consumers, seeing as they will never buy its products. This is a departure from prior tech-industry behemoths. Apple became a household name by selling beautiful devices anyone could use. Microsoft plastered its moniker on the software the world uses to work. A bevy of hard-tech companies from the dot-com era such as Cisco Systems or Sun Microsystems advertised heavily, which if nothing else helped them sell their shares to investors. Even Intel, the greatest chipmaker of the pre-Nvidia era, brilliantly convinced consumers who didn’t know a microprocessor from a microwave that they needed their computers to have “Intel Inside.”
Nvidia hasn’t needed any of this to reach its lofty valuation. Instead, a combination of patience and innovation (and the good fortune of having the market shift toward the very capabilities it already had developed) has made it the latest example of a Silicon Valley company that for now more or less owns a new world-changing category of technology.
Unlike many of its Valley forebears, Nvidia hardly emerged from the womb as a national champion. Founded in 1993, with the Taiwanese-born Huang as its top executive, Nvidia fumbled around for years before landing on a chip design that was ideal for the video game business. While Intel’s chips excelled at processing data, Nvidia’s “graphics” chips did the complicated math necessary for bringing the moving images of gaming to life. The company has been successful for years but in a niche corner of the semiconductor world. Chip leaders such as Intel and Samsung were far better known, with far larger revenue.
It was more recently that computer programmers figured out that Nvidia’s computational prowess could be used to train artificial-intelligence models, launching the company into the stratosphere as AI applications began to perform in ways that had been promised for years. Yes, it took 30 years for Nvidia to reach its first trillion dollars in valuation, in 2023. But it piled on an additional $3 trillion in the two years since.
Nvidia, in case you aren’t certain, is pronounced “en-VID-ee-uh.” Its charismatic CEO is known for his tough-guy black leather jackets as much as Steve Jobs was wedded to his mock turtlenecks. But Huang stuck to his nerd-lane for a good long while before stepping on the global stage; the 62-year-old has even taken on the role of Trump whisperer, recently persuading the president to reverse himself and now permit advanced chip sales to China. Huang promptly jetted off to Beijing to hawk his wares.
It was a big deal for Nvidia, which recorded $17 billion in sales in China last fiscal year - and the company would have lost big if the ban had remained in place. While declining to take credit for changing Trump’s mind, Huang made the case that not allowing U.S.-chip fabricators to sell in China would only accelerate Chinese development of competing chips.
The technology industry is replete with fallen giants, Intel being the most recent and extremely painful example. The onetime chip kingpin sports a valuation that is a fifth of its peak level of $500 billion, and its biggest news events of late have been repeated rounds of layoffs.
What Nvidia has going for it is that its chips fuel a tech trend that is the biggest thing for semiconductors since the personal computer itself. While tech behemoths including Google, Meta and Microsoft vie to best fast-growing upstarts such as OpenAI, Anthropic and Perplexity, Nvidia has the luxury of a large technology lead - the industry calls this a “moat” for its defensive connotations - and the ability to sell to all comers. It also has been investing in other companies involved in AI, such as CoreWeave, which provides online AI services and, naturally, uses Nvidia chips.
Nvidia has a name that hardly rolls off the tongue and a technology that non-nerds will never master. But it is powering a trend no one can ignore.