Is Nvidia’s near-monopoly status dangerous for the AI industry?
There are many companies developing AI models. But one company is integral to almost every major artificial intelligence project: Nvidia, since it has a monopoly on the computer chips required to run the intensive calculations required for AI operations. During every gold rush in history, the really smart investors have put their money into picks, shovels, and mining equipment instead of trying their luck digging for gold.
In the 21st century rush to develop AI, the smartest investors have backed this chip-design giant, elevating Nvidia to the status of the world’s most-valuable company. Nvidia’s rise has been meteoric. When OpenAI made its ChatGPT conversational AI tool available to the common user in November 2022, Nvidia had an annual revenue of $26.9 billion and $4.3 billion in net profit.
In 2023, as many tech companies focussed on developing AI models, Nvidia’s revenue jumped to $60.8 billion and its net profit to $29.7 billion. In May 2023, Nvidia’s market capitalisation crossed $1 trillion for the first time, and has tripled in the 13 months since. Analysts expect the US company’s revenue to double again in 2024, and to hit $160 billion by 2026.
That is incredible growth backed by strong margins. Nvidia’s corporate culture is worth mentioning. For one, it has fewer than 30,000 employees, which pales in comparison with other trillion-dollar giants.
Microsoft has about 220,000 employees, Apple about 161,000, and Google about 180,000. Nvidia’s work culture is driven by desperation. Its chief executive Jensen Huang used to start every presentation with a warning: “Our company is 30 days from going out of business." Nvidia is the world’s most famous chipmaker, but it doesn’t actually make chips.
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