Can Nvidia’s Boom Last?
Summary
TLDRThe video examines Nvidia's meteoric stock market rise fueled by AI, making it America's 3rd most valuable company. It provides background on Nvidia's founding and early focus on gaming GPUs. The boom is attributed to Nvidia controlling the AI chip market, providing the best chips, networking, and software. Risks include an AI bust, competitors catching up, and escalating US-China trade tensions. The script also discusses threats to personal data from shady data brokers, promoting incog's services to remove personal information from data broker websites.
Takeaways
- 😲 Nvidia saw the biggest single day stock gain in Wall Street history recently, making it the 3rd most valuable US company
- 📈 Nvidia's stock price has risen 600% in the last 18 months fueled by the AI boom
- 🎮 Nvidia started by making GPUs for video games, but has pivoted to AI chips in recent years
- ⛏ Nvidia is benefiting from the AI gold rush by selling the shovels - its AI chips and software
- 👷♂️ Nvidia has an effective monopoly in AI chips - controlling over 95% of the specialist AI chip market
- 🔌 Key to Nvidia's dominance is that it provides the full AI stack - chips, networking and software
- 🤖 Nvidia's future depends on: 1) AI boom continuing 2) Maintaining its monopoly 3) Outcome of US-China trade war
- 📉 There is likely some speculative excess in Nvidia's stock price recently
- 🚀 If AI takes off, Nvidia could become one of the most important companies in the world
- 🛡 Speaker recommends Incog app to protect personal data from shady data brokers
Q & A
When was Nvidia founded and by whom?
-Nvidia was founded in 1993 by CEO Jensen Huang and two other co-founders in California.
What are GPUs and how are they different from CPUs?
-GPUs (Graphics Processing Units) are specialized processors that break down complex tasks into parallel smaller tasks. This makes them well-suited for graphics rendering. CPUs (Central Processing Units) execute tasks sequentially rather than in parallel.
How has cryptocurrency mining impacted Nvidia's business?
-The rise of cryptocurrencies led to a surge in demand for Nvidia's GPUs for crypto mining, especially for Ethereum. This was great news for Nvidia, but also made the business vulnerable to crypto market volatility.
Why are Nvidia's GPUs useful for AI model training?
-Training neural networks involves massive parallel computation, which is exactly what GPUs are optimized for with their ability to break tasks down and process them simultaneously.
What is Nvidia's market share in AI chips?
-Nvidia has a near monopoly with over 95% market share in specialist AI chips.
How does Nvidia maintain its leading position in AI chips?
-Nvidia provides the best chips, networking solutions, and supporting software like CUDA. This makes it hard for competitors to match them on all fronts.
What are the risks to Nvidia sustaining its growth?
-Key risks are if AI hype fizzles out, competitors catch up, or US-China trade tensions and sanctions further impact sales.
What happened with Claude's personal data?
-Claude had his personal data sold by data brokers. This led to a huge fraudulent loan being taken out in his name.
How can incog help protect personal data?
-Incog proactively reaches out to data brokers to remove personal information and ensures it stays off the market through repeated requests.
What discount does the video offer on incog services?
-The video offers an exclusive 60% off annual plans for incog's data removal services.
Outlines
📈 Nvidia's Historic Rise Fueled by AI Boom
Paragraph 1 discusses Nvidia's meteoric stock rise over the past 18 months, making it the 3rd most valuable US company. It provides background on Nvidia - founded in 1993, went public in 1999, focused on graphics processing units (GPUs) for video games initially. The recent rise is attributed to surging demand for GPUs for AI model training, as Nvidia controls 95% of the AI chip market.
😲 Nvidia's Dominant Position in AI Chip Market
Paragraph 2 explains how Nvidia established dominance in AI chips - by providing the best chips, networking hardware and supporting software like CUDA. This creates high barriers to entry. Nvidia's future will depend on sustaining the AI boom, maintaining its monopoly despite rivals, and navigating US-China trade tensions.
Mindmap
Keywords
💡Nvidia
💡GPU
💡AI boom
💡training models
💡monopoly
💡trade war
💡semiconductors
💡crypto
💡sanctions
💡competition
Highlights
Nvidia was founded in 1993 and went public in 1999, focusing on designing graphics processing units (GPUs)
Until recently, Nvidia's GPUs were mainly used for video games, but they are also well-suited for AI model training
Demand for Nvidia's GPUs skyrocketed in the late 2010s due to the rise of cryptocurrencies and mining
Since the release of ChatGPT in late 2022, demand for Nvidia's GPUs has massively increased for AI model training
Nvidia has a near monopoly on specialist AI chips, controlling over 95% of the market
Nvidia provides the best chips, networking, and software for AI model training
The future of Nvidia depends on: 1) AI boom lasting, 2) Maintaining its monopoly, 3) Outcome of US-China trade war
There is likely some speculation driving Nvidia's stock price, but its fundamentals are strong
If AI is the future, Nvidia could become one of the most important tech companies
Nvidia enjoys a monopoly on AI chips - competitors like AMD struggle to match them
Big tech firms have started making their own AI chips due to Nvidia's high prices
US sanctions on China have reduced Nvidia's sales there, rerouted through Singapore
Escalating US-China trade tensions could make things much harder for Nvidia
There are risks, but Nvidia has an enviable position in a potentially critical industry
Nvidia could end up one of the most important companies if AI is the future
Transcripts
this video was brought to you by incog
last week Tech Giant Nvidia saw the
biggest single day gain in Wall Street
history making it America's third most
valuable company fueled by the ongoing
AI boom nvidia's stock has now risen by
600% in the last 18 months but its
parabolic rise does look a bit well
bubbly so in this video we thought we'd
take a look at both how Nvidia became
one of the world's most valuable
companies and whether this boom can
really
last before we start if you haven't
already please consider subscribing and
ringing the bell to stay in the loop and
be notified when we release new videos
so let's start with a little bit of
context Nvidia was founded by now CEO
Jensen hang and two other guys in
California in 1993 and went public in
199 9 for most of its first 20 years or
so Nvidia focused on designing Graphics
processing units or
gpus now Nvidia is what's known as a
fabulous company meaning that it doesn't
actually manufacture its own chips it
just designs them and then outsources
the manufacturing to someone else
usually the Taiwan semiconductor
Manufacturing Company anyway until
relatively recently these gpus were
mainly used in video games we're not
going to go into too much detail here
but the main difference between gpus and
CPUs is that gpus break down complex
tasks into thousands of separate tasks
and then solve them simultaneously and
in parallel rather than sequentially
this is obviously a massive
simplification but this is sort of what
makes gpus well suited to video games
where textures lighting and rendering of
different shapes all have to be done at
once anyway Nvidia did pretty well off
this both because the video games
industry experienced pretty steady
growth for the past 30 years or so and
because nvidia's high performance chips
account for nearly 4 fifths of gaming
gpus however the company's fortunes
improved dramatically in the late 2010s
with the rise of cryptocurrencies that's
because the enthusiasts quickly realized
that nvidia's gpus were perfect for
mining crypto currencies especially
ethereum and as such demands skyrocketed
this was obviously great news for NVIDIA
but it made the business vulnerable to
crypto related volatility which is why
nvidia's stock tanked in 2018 and
2022 however after falling over 60% in
the year to November 2022 nvidia's stock
has enjoyed a meteoric and apparently
Unstoppable Rise by mid 2023 its market
cap had more than doubled to a trillion
dollar surpassing both meta and Tesla
then on February 21st nvidia's
Blockbuster earnings report where the
company announced a
265 jump in revenues pushed it above $2
trillion making Nvidia the third most
valuable listed company in the US behind
only apple and Microsoft but ahead of
giants like Amazon and alphabet this
represented a single day gain of
$277 billion the largest in Wall Street
history so what explains this
stratospheric rise well the short answer
as you might have guessed is AI now
Nvidia doesn't actually have its own AI
models or anything like that but the
company has heeded the well-worn advice
during a gold rush sell shovels this
saying was inspired by the California
Gold Rush where many of the people who
actually made the most money weren't the
Prospectors but the people who sold
shovels to the punters if AI is the
metaphorical gold then nvidia's chips
are the shovels essentially while gpus
are useful for running AI models they're
especially useful for training the
models in the first place this is
basically because the task of training
neural networks involve tons of
repetitive smaller tasks which is
exactly what gpus are good for so since
the release of chat GPT in late 2022
Executives have been racing to
incorporate AI into their businesses and
that's created massive demand for
nvidia's gpus NVIDIA is particularly
well placed here because it has a near
Monopoly over specialist AI chips
controlling more than 95% of the market
this is both because nvidia's chips are
just really good their computation speed
has increased a thousandfold in the past
decade but also because Nvidia don't
just provide the chips it also provides
the stuff required to actually use the
chips first Nvidia provides a software
called cuda which allows customers to
fine-tune chip performance and is now
the industry standard and second Nvidia
provides the relevant networking
Services essentially the training of AI
models requires hundreds if not
thousands of chips to be used
simultaneously and these chips have to
be connected by a network thanks to its
purchase of networking Giant melanox in
2019 Nvidia now also controls something
like 80% of that market too so by
providing the best chips the best
networking kit and the best software
Nvidia has developed a sort of Mo that
insulates itself from competitors
because any serious Contender will need
to beat them on all three the question
is then can nvidia's boom last well
there's clearly a speculative element to
its recent performance in the stock
market as evidenced by the sheer number
of options contracts but as we've
hopefully demonstrated its fundamentals
are pretty strong nonetheless as we see
it nvidia's future depends on three
things firstly it depends on whether the
AI boom lasts at the moment people are
pouring insane amount of monies into AI
in the hopes that it ends up being a
lucrative World altering technology
while this is of course understandable
given the impressive power of stuff like
chat GPT AI might not turn out to be as
great as its Advocates claim chatbots
might Plateau training costs might get
too high or we might never solve the
hallucination problem and even if AI
does continue to improve the amount of
money slushing around might still
decrease especially if interest rates go
up or there's some sort of tech stock
crash the second thing this all depends
on is whether Nvidia can maintain its de
facto Monopoly already nvidia's main
competitor AMD has produced a chip is
generally considered to be better than
nvidia's equivalent and nvidia's Main
customers big tech companies like
alphabet Amazon meta and Microsoft have
got so fed up with paying a monopolistic
premium for NVIDIA chips that they've
actually started designing their own
while nvidia's position looks relatively
strong in the near future in the long
term it's definitely not guaranteed and
it's possible that another firm will
Leap Frog Nvidia in the same way that
Nvidia did to Intel thirdly it also
depends on the Brewing us China trade
War American sanctions have already
reduced nvidia's sales in China which
previously accounted for about 25% of
Revenue but Nvidia has been able to
mitigate against this damage by creating
chips that that fall just under
America's sanction thresholds and by
rerouting sales through Singapore where
Nvidia sales are growing faster than
anywhere else if however the trade War
heats up and American sanctions escalate
this could make things significantly
more difficult all in all then well
there's probably a bit of a rational
exuberance regarding stock price and
clearly some medium-term risks Nvidia is
clearly in an enviable position it
enjoys something nearing a monopoly on
AI chips and if AI ends up being the
future defining technology that
Advocates claim Nvidia could end up with
one of the most important companies in
the world clearly though the state of
the world is plagued by uncertainty and
risk and while you've been watching this
video about Nvidia your personal
information may have been sold or
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