Nvidia: shares and stock market price amid AI boom explained - GPU maker joins Microsoft in one trillion club

Chip manufacturer Nvidia joined the exclusive group of US firms valued at more than $1 trillion on Tuesday - at least for a short time. The other publicly traded US companies valued more than $1 trillion (£800 billion) are Apple, Amazon, Alphabet, and Microsoft.

The company momentarily joined the group when its share price rose by more than 5% before falling. Shares had already increased by more than 25% after the company predicted "surging demand" as a result of developments in artificial intelligence (AI).

Nvidia is a multinational technology company specialising in the design and manufacturing of graphics processing units (GPUs) and other related products. But what exactly does the company do, and what are its inexorable links to gaming and AI? Here is everything you need to know.

What is Nvidia?

Nvidia was founded in 1993, in Santa Clara, California by Jensen Huang, Chris Malachowsky and Curtis Priem. Huang - who remains the current president and CEO of the company - had previously worked at AMD, and the three co-founders shared a vision of creating a new type of computer graphics technology.

Initially, Nvidia focused on developing 3D graphics chips for the PC gaming market. In 1999, they released the GeForce 256, their first GPU, which introduced new lighting capabilities and revolutionised the gaming industry. This GPU laid the foundation for modern 3D graphics and established Nvidia as a key player in the gaming hardware market.

Over the years, Nvidia continued to innovate and release more and more powerful GPUs, becoming synonymous with high-performance graphics for gaming. Its GeForce series of graphics cards, including the popular GeForce GTX and RTX lineups, has been widely adopted by gamers worldwide.

Nvidia's GPUs are known for their graphics rendering capabilities, enabling realistic visuals, high frame rates and advanced features such as real-time ray tracing and deep learning super sampling (DLSS), which uses machine learning algorithms to upscale lower-resolution images, improving performance without sacrificing image quality.

How is Nvidia involved in AI?

Long before the AI revolution, the company's co-founder Jensen Huang gambled by investing in new Nvidia chip capabilities, expanding Nvidia's focus beyond gaming and venturing into AI and machine learning after recognising the potential of its GPUs for accelerating AI workloads.

Nvidia developed a specialised platform called CUDA (Compute Unified Device Architecture), which allows developers to harness the power of GPUs for general-purpose computing, including AI tasks. The company's GPUs are widely used in AI research, training neural networks and running complex AI models.

ChatGPT for instance, the release of which last year ignited the AI craze, was trained using 10,000 Nvidia GPUs gathered within a Microsoft supercomputer. According to one report, the company has a monopoly on 95% of the machine learning business, and its hardware currently powers the majority of AI applications.

Nvidia's stock price has more than doubled over the last year as investors predict the company will profit when AI ushers in a new wave of technological advancements. Wedbush Securities analyst Dan Ives stated last week that investors "view Nvidia at the core hearts and lungs of the AI revolution."

Nvidia experienced a spike during the pandemic (with people spending more time at home, gaming became a popular form of entertainment), but its overall revenue growth has remained flat and its profits were cut in half last year.

There are also concerns about Nvidia's ability to meet demand, particularly as start-ups and competitors like AMD and Intel scramble to create their own products. The company is also facing ethical dilemmas, such as whether it should scrutinise the AI products for which it makes chips amid growing worries about how AI may affect society.