Ten years ago, Nvidia was a giant graphics card manufacturercompeting with competitors like AMD and Intel for dominance. Now it’s an AI giant with 70% to 95% market share of OpenAI’s ChatGPT AI chips and brains. It’s also best performing stocks With highest return over the last 25 years.
Why Nvidia invested in AI chips greater than a decade ago, ahead of the competition? CEO Jensen Huang and board member Mark Stevens, Nvidia’s two largest individual shareholders, spoke with Sequoia Capital Partners Roelof Botha explains what Botha called “one of the most extraordinary turnarounds in business history.”
Nvidia’s initial product was 3D graphics cards for PC gaming, but in the mid-2000s, company executives realized that the PC market had reached its growth limit.
“We recognized that we would always be limited to the PC gaming market and that we would have to compete with Intel unless we developed a completely new market that no one else was doing,” Stevens explained.
Jensen Huang, Nvidia Co-Founder and CEO. Photographer: Lionel Ng/Bloomberg via Getty Images
This recent market need intersected with a product Nvidia already had on hand: its graphics processing unit, or GPU, which may very well be used to power non-gaming tasks. Researchers at universities around the world began studying graphics cards, eventually building advanced computers with them.
Huang recalled meeting a quantum chemist in Taiwan who showed him a rack with a “massive collection” of Nvidia graphics processors on shelves, with fans in the room spinning to maintain the systems cool.
“He said, ‘I built my own supercomputer.’ And he told me that because of our work … he was able to do his job in his lifetime,” Huang said.
Other researchers, like Yann LeCun, head of Meta AI in New York, began approaching Nvidia about the processing power of its chips. Nvidia began considering the AI market when AI had not yet gone mainstream and was a “zero billion dollar market,” or a market that had not yet materialized.
“There was no guarantee that AI would ever really take off, because remember AI has had a lot of stops and starts over the last 40 years,” Stevens said. “I mean, AI has been around as a concept in computing for decades. But it never really took off as a huge market opportunity.”
Huang and other company leaders continued to imagine in AI and decided to speculate billions in the technology in the 2010s.
“It was a huge turnaround for our company,” Huang said. “The company has separated itself from its core business.”
Huang emphasized the additional costs, talent, and skills that Nvidia needed to factor into this modification because it affected the entire company. It took 10 to fifteen years of effort, but this business decision led to Nvidia driving the AI revolution with early ChatGPT Partnership.
“Any CEO’s job is to look around the corner,” Huang said. “You want to be the person who believes the company can do more than the company thinks it can.”