Neural Notes: Nvidia isn’t the only AI hardware success story

Welcome back to Neural Notes, a weekly column where we go through some of the biggest and most interesting AI news of the week. In this edition: Nvidia smashes its latest quarterly results so hard that everyone has forgotten the other AI hardware players in the space.

Overnight Nvidia posted its latest earnings report, revealing yet another record-breaking quarter for the GPU maker. The company saw revenue soar to US$22.1 billion — a 265% year-on-year increase — as well as its share price jump by 16% to US$785.38. It now boasts a market value of US$273 billion.

These eye-watering results are a continued reflection of the critical role Nvidia’s GPUs are playing in powering AI applications across various sectors.

Why Nvidia has taken off

The extreme success of Nvidia is hardly surprising. GPUs have become a hot commodity over the past few years. And Nvidia was the company that invented them in 1993 due to the founders’ belief that the future of computing was in graphics and their ability to solve complex problems.

And they were right, particularly when it came to video games, which had large computing problems that needed to be solved, alongside a worldwide customer base.

This was strongly demonstrated during the pandemic when the tech industry was plagued by supply chain and chip shortage issues.

This had a trickle-down effect on the market, including the gaming sector. When Nvidia released its much-anticipated RTX 3080 card in 2020, it sold out immediately and became subject to straight-up price gouging.

GPU shortages and price increases were then further impacted by a new wave of interest — crypto mining.

While Nvidia’s 30-series GPUs were less efficient at mining than other tasks, they were still being sucked up to be used in mining farms all over the world as crypto, meme coins, and NFTs took off across the internet. Nvidia also now sells hardware geared specifically at crypto mining.

But none of this rise in demand was a blip compared to the success that has been realised thanks to the swift and exponential popularity of AI.

This resulted in a renewed surge of interest in Nvidia, in part because of its well-timed product. Around the same time that OpenAI launched ChatGPT in November 2022, the chipmaker released its most powerful processor — the H100 —  and it was specifically geared towards generative AI. It was also retailing for US$40,000.

Fast forward to now and Nvidia has an entire suite of AI-focused products, including AI software aimed at enterprise and an ‘AI Supercomputer’.

And as we saw from today’s quarterly results and subsequent share price jump — things are going more than a little well for the company.

However, Nvidia’s monumental success story is just a chapter in the larger saga of the AI revolution’s impact on the semiconductor industry. The ripple effects of its triumph are lifting boats across the entire sector.

Beyond Nvidia

While the focus has largely been on Nvidia when it comes to conversations around the hardware powering AI, there is a wider industry boom spurred by the surging demand for AI capabilities.

Companies like Advanced Micro Devices (AMD), Taiwan Semiconductor Manufacturing Company (TSMC), and others in the semiconductor and AI chip design space are riding the same wave of exponential growth driven by AI and machine learning technologies.

AMD, for instance, saw its shares surge more than 10% following Nvidia’s earnings report. Similarly, TSMC, the world’s largest contract chipmaker, and a key Nvidia supplier, rose 3% in after-hours trading.

Other hardware companies that saw a boost included Super Micro Computer (5.2%), Qualcomm (1.2%) and Micron (1.5%).

But it’s not just the afterglow of Nvidia’a success today that is driving the growth of these companies. AMD launched its own AI-focused chips as a competitor to Nvidia back in December. So did Intel with its Gaudi3, which focuses on generative AI.

And despite the bump in both stock prices today, they were already riding high. The AMD price has risen 31.23% in the past 12 months, and TSMC is up 18.38%.

Looking ahead, the trajectory for Nvidia and its peers seems poised for continued growth. And the bar is now set incredibly high, not just for Nvidia but for the entire industry.

The AI chipset and semiconductor space is at the cusp of an era defined by accelerated computing and generative AI, with Nvidia’s recent performance serving as both a benchmark and a beacon for what’s possible.

Companies like AMD, TSMC, and others are going to be integral threads in the fabric of the future of AI, particularly as more businesses — big and small — begin utilising it more.

For enthusiasts and investors alike, the message is unmistakable — while Nvidia may have captured the spotlight this quarter, the entire AI chipset and semiconductor industry is on a trajectory for unprecedented growth and innovation.