Nvidia Corp (NASDAQ: NVDA)

Key Highlights:

Nvidia’s H100 chip becomes a sought-after commodity.
Demand from global giants like Microsoft, Amazon, Google, and Meta.
Joe Biden’s restrictions on H100 exports to China highlights geopolitical AI race.
Generative AI, powered by H100, raises warnings about technology’s potential influence.

Overview:

In 2023, one of the most coveted commodities isn’t a precious metal or fuel but Nvidia’s H100 computer chip. With a price tag of $40,000, it’s no surprise that half a million units expected this year are already sold out. These chips are primarily procured by the wealthiest companies on the planet, including Microsoft, Amazon, Google, and Meta.

Technical Details:

The H100, an intricate array of circuits highlighted by a central microchip, is not just any computer chip. It’s the world’s first chip designed specifically for “generative” artificial intelligence (AI). Such powerful, “creative” AI systems like ChatGPT have garnered worldwide attention, and Nvidia’s H100 is at the heart of this movement.

Company’s Journey:

Historically, Nvidia’s GPUs were essential for 3D graphics in video games. It was a serendipitous discovery that these GPUs were also adept at data processing required for AI. In just a year, researchers replaced 16,000 CPUs with just four of Nvidia’s GPUs to train an AI model, emphasizing the efficiency and capability of their technology.

Market Position:

While Nvidia faces competition, it has established itself as the predominant player in this arena. Tech giants and nation-states are in a fierce battle for AI supremacy, with the H100 being the chip of choice. Nvidia’s prior version, A100, powered systems like ChatGPT, and the new H100 offers substantial upgrades in processing power.

Geopolitical Implications:

The AI race is not just a technological one but also a geopolitical one. While China ambitiously seeks to be an AI innovation center by 2030, the US has imposed sanctions to curb its AI progress. Moreover, despite Nvidia’s American roots, its high-power chips are produced in Taiwan, adding to geopolitical tensions given China’s interest in the region.

Economic & Industry Impact:

Beyond national security, AI’s rapid advancement poses various challenges and opportunities. Generative AI programs, like ChatGPT, could enable large-scale cyberattacks or be used in disinformation campaigns. On the positive side, once AI reaches a certain level of sophistication, it could lead to significant economic benefits and scientific breakthroughs.

UK’s Position:

While the UK has been a pioneer in some AI developments, it lags in computing power essential for modern AI technologies. The UK’s primary supercomputer, Archer-2, didn’t anticipate the AI boom, resulting in inadequate infrastructure.

Global AI Powerhouses:

Contrary to popular belief, the real AI powerhouses might not be nation-states but giant tech companies. With extensive resources at their disposal, companies like Google, Amazon, and Microsoft overshadow many countries in AI development capabilities. Inflection AI, funded by Microsoft, for instance, is building an AI supercomputer powered by 22,000 H100 chips.

The Future:

Nvidia remains a significant figure in the AI trajectory, recently announcing an even more powerful chip, the “GH200”. As nations and corporations jostle for AI dominance, the stakes continue to rise, and Nvidia sits at the heart of this technological revolution.

Stock Performance:

NVDA has been in correction mode with the rest of the market falling from a high of $480/share on July 14th down to the current price of $433/share. Although, it could be finding support now.

Analyst Coverage:

Conclusion:

Nvidia’s trajectory and the AI race, in general, is both an opportunity and a challenge. As the world grapples with AI’s implications, from economic to geopolitical, Nvidia’s position as a key player is undeniable. Investors should keep a close eye on developments in this sector and Nvidia’s strategic moves.

Disclaimer: The author is not a licensed financial advisor and the content provided is for informational purposes only. Furthermore, the author of this article does not own any shares of NVDA as of 08/19/2023. Always consult with a certified financial advisor before making investment decisions.