Advancements in artificial intelligence (AI) have allowed the technology to become incredibly popular in the mainstream and the business space over the past couple of years. AI models such as ChatGPT have showed the public and businesses around the world what generative artificial intelligence is capable of.
Although the technology is still in its infancy, AI has the potential to revolutionize current business practices and even change how certain industries operate. At the heart of this revolutionary technology are advanced computer chips that power the complex algorithms behind AI models.
Nvidia Corp. (NASDAQ: NVDA) was mostly known for developing graphics processing units (GPUs) to render high-quality images and video. The California-based tech company started out building GPUs for the Sony PlayStation and Microsoft Xbox but diversified in the 2000s as Silicon Valley expanded. Nvidia provided chips for the Google Chromebook line, driver-assist software for EVs and hardware for Tesla electric cars. Nvidia sales grew even further when the coronavirus pandemic struck and forced millions of people to work remotely, allowing the company to achieve $22 billion in revenue by 2022.
However, the recent AI revolution caused Nvidia’s fortunes to skyrocket as the company positioned itself as the top AI chip manufacturer. Nvidia’s GPUs rely on a type of computing called “parallel computing,” which allows computers to carry out multiple processes simultaneously. This computing is much more efficient compared to the sequential computing of traditional central processing units (CPUs).
As such, programmers are increasingly using GPUs from Nvidia to program AI software, making Nvidia graphics processing units incredibly valuable in the ongoing AI revolution. According to PNC Financial Services Group analyst Amanda Agati, Nvidia’s specialization in discreet GPUs grants it a “quasi-monopoly” in the AI training segment.
New Street Research estimates that Nvidia has secured 95% of the market for GPUs that can train AI models. Many advanced AI models from top companies such as Stable Diffusion, OpenAI, Google and Microsoft rely on the Nvidia A100, a $10,000 computer chip that has emerged as one of the most important tools in the AI race.
Startups and companies developing AI-powered software such as image generators and chatbots often need hundreds or even thousands of Nvidia chips to train AI models and then help them make predictions, identify objects in photographs or generate text.
Stability, the company behind Stable Diffusion, used more than two dozen Nvidia AI00 chips to help develop the AI generator, CEO Emad Mostaque says. With more and more businesses fighting to access Nvidia’s GPUs, the company’s artificial intelligence chip business grew by 11% to more than $3.6 billion in sales during the fourth quarter of 2023.
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