FAQ
Tech companies have been able to benefit from a boom in the artificial intelligence industry in recent weeks. However, there are differences – and one company in particular stands out.
The hype surrounding artificial intelligence is currently triggering a surge in demand for many tech companies. Thanks to the AI frenzy, the tech-heavy U.S. index Nasdaq 100 rose 7.6% in May alone, and the index has even recovered about 30% since the start of the year. Because American companies in particular stand to benefit from the AI boom — especially chip developers.
Why are chipmakers benefiting from the AI boom?
Artificial intelligence programs such as ChatGPT can generate text, images or videos with just a few keywords. For this, countless calculations have to be performed in parallel – so the program requires a lot of computing power. Graphics chipsets (GPUs) are particularly suitable for this.
Further developments are happening at breakneck speed: According to analysts at investment bank Goldman Sachs, investment in artificial intelligence could reach one percent of annual economic power in the US alone by 2030. That would have been $287 billion, according to the Lowy Institute think tank’s forecast for U.S. gross domestic product at the time. Computing power has to keep up, too, fueling demand for chips in particular. The world’s largest GPU supplier is Nvidia.
What makes Nvidia so special?
Nvidia was founded 30 years ago by Taiwanese-American Jensen Huang, along with Curtis Priem and Chris Malachowsky, and is headquartered in Santa Clara, California. According to experts, Nvidia controls 80% of the world’s graphics chip market – the US group has a wide range of products, just for accelerating machine learning.
That pushed Nvidia’s market capitalization past the trillion-dollar mark last Tuesday. The company is the first chipmaker to be included in the exclusive club that currently includes six companies with market capitalizations greater than $1 trillion.
There are several prominent examples of Nvidia chips built in: the high-performance computer used for ChatGPT is based on thousands of Nvidia processors, and Google uses such Nvidia chips to train its translation service, Google Translate.
Which companies are also benefiting from the AI hype?
Nvidia’s competitors are AMD, ASML and Marvell, all of which have also benefited from the AI boom. ASML has posted year-to-date growth of over 30%. Software companies such as Amazon, Google, and Facebook parent Meta are now also developing their own special AI processors. They too can benefit from the current AI boom, but not nearly as much as Nvidia.
Thomas Hayes, chairman of private equity firm Great Hill Capital, said of Nvidia’s strong earnings report: “If the AI trend proves to be sustainable, the immediate demand will be for chips and computing power, and this is what Nvidia Where the current flagship is.” Over the past few weeks.
There are also companies in Germany that want to capitalize on the AI hype, such as Spinncloud in Dresden. However, Gartner analyst Alan Priestley told Handelsblatt in an interview that it is particularly difficult for start-ups to gain a foothold in the industry, as data center operators often find it difficult to even get trial chips from small companies. So it is especially the big, well-known companies that benefit from the AI hype.
How do software companies do business?
In terms of artificial intelligence application development, OpenAI, a ChatGPT developer in which Microsoft has a stake, and Internet group Google are competing for technological leadership. The jury is still out on exactly which AI applications will ultimately prevail, though. This should also be the reason why their stock market value is also rising, but not as extreme as Nvidia is now.
In addition, the market capitalization of software companies important to the development of artificial intelligence has exceeded trillion dollars: online retailer Amazon, iPhone supplier Apple, software company Microsoft and Google parent company Alphabet are all worth more than trillion dollars. More than $1 trillion.