Nvidia's Remarkable Evolution: From Near Bankruptcy to $1 Trillion Valuation
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When I think of Nvidia, the first image that comes to mind is its graphics cards, which have become essential in the gaming industry. Fans of Wall Street may also associate Nvidia with its soaring stock prices.
Did you know that in 1997, Nvidia was on the brink of bankruptcy? Yet, from 2018 to 2023, its stock price skyrocketed from $40 to $480. Investors who held onto Nvidia shares for five years likely saw their investments multiply tenfold.
Initially, I was puzzled by Nvidia's stock performance, wondering if the company had been producing graphics cards since 1997. What significant developments occurred in the last five years that led to such a surge? It's astonishing to learn that Nvidia's market capitalization has now exceeded $1 trillion. The company is currently engaged in innovative projects that promise to advance technology further.
You might assume Nvidia solely produces graphics cards, but that’s not the case. Major corporations like Apple, Microsoft, and Google are now wary of Nvidia’s growing influence.
This article delves into Nvidia's fascinating journey and explores why industry giants are starting to feel threatened.
The Beginning: 1993
Nvidia's story starts in 1993, the year "Jurassic Park" made waves by grossing over $900 million, becoming the highest-grossing film of its time. For the younger generation, this film may not resonate as much, but it had a profound impact back then. What made "Jurassic Park" so popular? The answer is simple: its groundbreaking graphics.
In 1993, while many CGI films existed, none had effectively brought dinosaurs to life as "Jurassic Park" did, igniting a demand for 3D graphics in the film industry.
The Rise of Computers: 1997
The computer revolution kicked off in the U.S. in 1993, with more than 35% of Americans owning computers by 1997. As the need for computers surged, so did the demand for innovations in the tech sector.
Before 1997, computers relied solely on CPUs, the brain of the machine, to process data. However, it became evident that for demanding software and gaming, CPUs alone were insufficient.
Enter Nvidia
Our protagonist, Jensen Huang, co-founder of Nvidia, was born in Taiwan and studied Electrical Engineering in the U.S. Together with his two friends, Chris Malachowsky and Curtis Priem, he envisioned a future dominated by accelerated computing through graphics.
They were convinced that while CPUs could run applications, heavy computational tasks would require a new approach. Inspired by CGI movies and 3D gaming, they founded Nvidia on April 5, 1993, with an initial investment of $40,000, focusing initially on video game graphics.
Huang envisioned a GPU that would integrate seamlessly with motherboards, enhancing CPU performance. To realize this vision, he began developing GPUs.
Breakthrough: 1997
By 1997, Nvidia had created its first high-performance graphics chip, prioritizing innovation over production. Lacking funds for manufacturing, they decided to outsource production, awarding the contract to TSMC, a Taiwanese semiconductor giant known for precision. Remarkably, TSMC has continued to manufacture Nvidia's chips since then.
Nvidia's role was to innovate the core technology, while TSMC handled the manufacturing.
> "Anyone can manufacture, but it’s the creators of technology who hold the true value. TSMC produces the chips, yet Nvidia's name remains on them."
Surviving the Dotcom Bubble: 1999
Though Nvidia found success in 1997, the market faced a downturn in 1999 due to the dotcom bubble burst. Many companies fell, but Nvidia thrived thanks to its innovative products.
In 1999, Nvidia launched the GEFORCE 256, claiming it was the world's first GPU. This revolutionary graphics card introduced new functionalities, such as altering lights, colors, and contrasts, and it played a crucial role in Nvidia's survival during the dotcom collapse.
Partnering with Microsoft: 2000
In 2000, Microsoft planned to launch a new Xbox console, choosing to incorporate Nvidia's graphics card. This partnership marked a pivotal moment for Nvidia, accelerating its growth trajectory.
Innovation Continues: 2004
By 2004, Nvidia embarked on the CUDA project (Compute Unified Device Architecture), which transformed the functionality of graphics cards. Before CUDA, graphics cards could only handle serial computing, where tasks were executed sequentially.
Enhanced Processing Performance
CUDA revolutionized graphics processing by enabling parallel computing, allowing multiple tasks to be executed simultaneously. This led to a 3.6X improvement in Nvidia's graphics card performance, enabling complex tasks like 3D rendering and video format conversion.
> Following the success of CUDA, Nvidia explored new projects, though not all were successful.
Market Challenges: 2010
In 2010, Nvidia attempted to penetrate the smartphone market with the Tegra 4i processors but ultimately shifted its focus back to graphic cards, recognizing its core strengths.
A New Era: 2018
By September 2018, Nvidia introduced the GEFORCE RTX 2080, the world's first Ray Tracing graphic card, marking a significant advancement in gaming technology.
GTX vs. RTX
While the GTX series aimed to enhance gaming performance, the RTX cards were designed for a broader range of applications, including design, visualization, and crypto mining.
Financial Success
Currently, 58% of Nvidia's revenue stems from graphics cards, with the remaining 42% from ventures in AI technology related to self-driving cars, crypto mining, and medical research.
Nvidia's remarkable journey has culminated in a market cap of $1 trillion. There's much more to share, but to keep this article concise, I will save additional details for a future publication.
Stay tuned for the next chapter of Nvidia's story by following my updates!
> Thank you for reading!
Disclaimer
I am not a financial advisor. This article is not associated with any financial products or services and is intended solely for educational purposes, based on my personal insights and experiences.