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Taiwan’s AI chip dominance has left other countries like the US and Australia racing to catch up and not be left out of the AI arms race.
Nvidia chief executive Jensen Huang used a two-hour speech at the Computex tech expo in Taiwan this week to declare the “next Industrial Revolution has begun”.
“Companies and countries are partnering with Nvidia to shift the trillion-dollar traditional data centres to accelerated computing and build a new type of data centre – AI factories – to produce a new commodity: artificial intelligence,” Huang said.
Nvidia chief executive Jensen Huang: “A new computing age is starting.”Credit: AP
In May, the company reported a $US14 billion profit in a single quarter, and said it would design new chips every year instead of once every two years. Demand is currently outstripping supply for Nvidia’s processors, with the company set to soon release its next-generation AI chip, H200, which the company says has superior memory capacity and bandwidth.
“The next company who reaches the next major plateau gets to announce a groundbreaking AI, and the second one after that gets to announce something that’s 0.3 per cent better,” Huang said.
“Do you want to be the company delivering groundbreaking AI, or the company, you know, delivering 0.3 per cent better?”
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The company is planning a 10-for-1 stock split on Friday, a move that will affect its share price, but not its total valuation.
Nigel Green, chief executive of deVere Group, one of the world’s largest independent financial advisory firms, said Nvidia’s stellar results underscore why “almost every investor needs exposure to AI”.
“As the key player, Nvidia’s performance not only impacts its own valuation, but also sets the tone for the broader AI industry,” he said.
“AI has the potential to transform various industries, including healthcare, finance, transportation, and manufacturing,” Green added.
“The global AI market is expected to grow exponentially in the coming years, driven by advancements in machine learning, natural language processing and data analytics. Companies that adopt these technologies are likely to gain a competitive edge by automating processes, improving decision-making, and enhancing customer experiences.”
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Being at the heart of the AI boom, it looks like Nvidia’s rally has a way to go still even after the recent gains.
With analysts’ profit estimates for the company rising even faster than its share price, the stock remains attractive compared with other big tech names such as Microsoft that aren’t growing as fast, said Michael O’Rourke, chief market strategist at Jonestrading.
“For a similar valuation, you’re getting so much greater growth with Nvidia,” he said. “There’s no competition for that kind of fundamental growth in a megacap company.”
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