One of Jensen Huang's Ambitious Goals Might Make Nvidia Its Own Worst Enemy

In This Article:

Key Points

  • Nvidia has been the biggest beneficiary of the rise of artificial intelligence (AI), which can add up to $15.7 trillion to the global economy come 2030.

  • One of the linchpins of Nvidia CEO Jensen Huang's growth strategy is to debut an advanced graphics processing unit (GPU) every year.

  • Though Huang's accelerated innovation timeline should help Nvidia maintain its compute advantage, it can cost his company in a number of other ways.

  • 10 stocks we like better than Nvidia ›

The advent and proliferation of the internet in the mid-1990s was a can't-miss trend that captivated the attention of everyday investors. Since this moment, numerous other game-changing innovations have come along that have promised pie-in-the-sky addressable markets. This includes business-to-business e-commerce, genomics, 3D printing, and the metaverse, to name a few hot trends.

But over the last three decades, no trend has come particularly close to rivaling what the internet did for corporate America... until now.

The evolution of artificial intelligence (AI) looks to be the next leap forward for the tech industry and society as a whole. The vastness of this game-changing opportunity, which allows AI-empowered software and systems to make split-second decisions without human intervention, is reflected in PwC's estimate that AI will add $15.7 trillion to the global economy in 2030.

A large Nvidia sign in front of the company's Voyager headquarters.
Image source: Nvidia.

A $15.7 trillion addressable market means a lot of companies are going to be winners, from hardware to actual application. However, no company has been a bigger beneficiary of the AI revolution than Nvidia (NASDAQ: NVDA).

The potential problem is that one of Nvidia's biggest perceived competitive advantages might also be its undoing.

Innovation comes first for Nvidia and CEO Jensen Huang

Since 2022 came to a close, shares of Nvidia have advanced by more than 870%, with the company tacking on over $3 trillion in market cap and completing a historic 10-for-1 forward split. Though Nvidia's aggregate percentage return has lagged Palantir Technologies, Nvidia's valuation soared quicker than any megacap stock in history.

Nvidia's outperformance is directly reflective of its ideal positioning in AI-accelerated data centers. The company's Hopper (H100) graphics processing units (GPUs) and successor Blackwell GPU have been the preferred options in high-compute data centers. In other words, there's a very high probability that Nvidia's hardware is behind the latest generative AI solutions and the training of most large language models.