Dear reader,
In the 1990s there was only one name in computer chips. Its logo was almost certainly on the hulking big PC you used at home, in the office or in the school computer room. But one day in 1993, while Intel enjoyed a near monopoly over computer chips, three enterprising tech entrepreneurs formed a company over coffee and breakfast at a roadside diner in East San Jose, California.
Nobody could have known it at the time, but that agreement between the founders of what was to become Nvidia turned into a $2 trillion business, which is now spearheading the drive for better and faster computers to power everything from the most advanced games to the artificial intelligence (AI) revolution that is changing our lives and dominating stock markets.
What exactly does Nvidia do? The usual categorisation as “computer chip maker” is a good start. But this is a very large technology company. It designs and develops chips and software for a wide range of computing purposes. This ranges from top-end gaming and automotive computing systems to artificial intelligence (AI) and autonomous manufacturing robots.
A full exploration of what Nvidia does might take days. The practical answer is simple: Nvidia enables modern computing. Its hardware and software provide the muscles that are lifting AI, robotics and more into our homes, businesses, laboratories and beyond.
How did Nvidia go from a large business few people had heard of in 2019 to the share everyone wants in a few short years? There are multiple reasons. For starters, the company’s relatively low public profile speaks to the nature of Nvidia’s products. Their logo isn’t emblazoned on the phone in your pocket or the AI-powered app you subscribe to. But you can rest assured that you benefit from Nvidia’s products in a multitude of ways. You are using it indirectly in the cloud or via gadgets that Nvidia’s computing power helped to develop.
Another boon for Nvidia has been their early focus on a specific kind of chip called a graphics card, or graphics processing unit (GPU). That gave it an early mover advantage when graphic artificial intelligence (GAI) took off. So Nvidia leads the pack with tools that generate all sorts of video and imagery, including for the mammoth global gaming industry. Its public profile certainly took off when GAI tools like ChatGPT exploded into the public consciousness.
Nvidia has grown well beyond that. In this sense, Nvidia embodies a phenomenon that has driven the way we have designed our primary tech and AI-focused fund, the 1nvest S&P500 Info Tech Index Feeder ETF. Nvidia has used its expertise, market position and capital to acquire AI technology and bring it all the way through to profitability. In this way it leverages its ecosystem to generate synergies that would otherwise not be possible for smaller individual firms and start-ups.
So investment exposure to Nvidia gives access to not just one of the world’s few $2 trillion tech giants, but also a growing, innovative and nimble world of the most exciting tech start-ups.
Where is Nvidia going from here? The forecasts for AI provide a good sense of company prospects. To pick just one prominent take on this, Goldman Sachs reckons that GAI “could drive a 7% (or almost $7 trillion) increase in global GDP and lift productivity growth by 1.5 percentage points over a 10-year period” (Goldman Sachs Group, 2023). As a market leader, Nvidia is positioned to be a keystone of this growth.
But Nvidia does far more than just GAI. A vote for Nvidia is a vote for the future of technology and the capacity of high-end computing to solve problems, deliver new products and create services that we are only just beginning to imagine.
To learn more about our 1nvest S&P500 Info Tech Index Feeder ETF – with more than 10% weighting in Nvidia stock – read our recent Fund Focus piece here.
