Wall Street has been waiting, sometimes impatiently, for the next-big-thing trend to come along that would rival what the internet did for businesses. After an extensive wait, the artificial intelligence (AI) revolution appears ready to answer the call.
With AI, software and systems are given autonomy to oversee tasks that humans would normally handle. The key to AI's long-term success, and the source of its seemingly limitless ceiling, is the capacity for AI-driven software and systems to learn without human intervention. Machine learning gives AI the potential to become more proficient at existing tasks, as well as learn new skills.
No company has benefited more directly from the rise of AI than semiconductor goliath Nvidia (NASDAQ: NVDA).
Until recently, Nvidia's operating ramp-up had been flawless
At the beginning of 2023, Nvidia was sporting a $360 billion market cap, which put it on the fringe of being one of the most influential technology companies in America. By June 20, 2024, less than two weeks after completing its historic 10-for-1 stock split, Nvidia's market cap peaked at $3.46 trillion on an intra-day basis. Investors have simply never witnessed a market leader gain more than $3 trillion in value in less than 18 months before.
The catalyst behind this potentially once-in-a-lifetime move is the company's AI graphics processing units (GPUs), which have become the standard in high-compute enterprise data centers. The semiconductor analysts at TechInsights estimate that Nvidia was responsible for all but 90,000 of the 3.85 million GPUs that were shipped to enterprise data centers in 2023.
With demand for the company's chips overwhelming supply, Nvidia has been able to dramatically increase the selling price of its superstar AI-accelerating chip, the H100. In a stretch of five quarters, the company's adjusted gross margin expanded by roughly 13.7 percentage points to 78.4%.
Having its hardware be the center of attention in enterprise data centers has also fueled ongoing innovation. In March, Nvidia introduced its next-generation Blackwell platform as being capable of accelerating compute capacity in a number of areas, including generative AI solutions, while consuming less energy than its predecessor. In June, CEO Jensen Huang teased the debut of its Rubin GPU architecture, which will be powered by a new processor, known as "Vera." Rubin is set to make its debut in 2026.