Nothing invidious here

When Jensen Huang was celebrating his birthday in a Denny’s diner with a couple of electrical engineers 30 years ago, he thought up the concept that would become Nvidia. They invested $40,000 of their own money to start producing improved graphics for video games.

About seven years ago the company changed its focus from gaming to artificial intelligence (AI) and the afterburners really kicked in when generative AI became the hottest ticket in town. Now Nvidia’s H100 chips are blowing away the competition.

The company stunned Wall Street with its second-quarter guidance, forecasting sales of $11bn more than 50% higher than the Wall Street consensus of $7.1bn.

It was one of the biggest rabbits ever pulled out of a hat by a largecap tech company and the share price rocketed 24.4% in a day, bringing its market capitalisation within spitting distance of $1-trillion. Particularly galling for rival Intel was that Nvidia’s market cap rise that day was the equivalent of about 1.7 times its own market cap.

There are concerns that tensions between the US and China could do serious damage to the sector, and Nvidia is barred from selling its highest-performing chips to China, but for the moment it looks to be way ahead in the technology required to build generative AI systems.

Investment continues to pour into the sector, with Amazon, Google, Meta and Microsoft all racing to develop custom chips for AI, but as things stand Nvidia is in pole position.

It was unable to translate its punk, upstart image into a grown-up business that actually generated profits