How Nvidia became a trillion-dollar company

Nvidia’s transformation from an accelerator of video games to an enabler of artificial intelligence (AI) and the industrial metaverse didn’t happen overnight—but the leap in its stock market value to over a trillion dollars did.

It was when Nvidia reported strong results for the three months to April 30, 2023, and forecast that its sales could jump by 50% in the following fiscal quarter, that its stock market valuation soared, catapulting it into the exclusive trillion-dollar club alongside well-known tech giants Alphabet, Amazon, Apple, and Microsoft. The once-niche chipmaker, now a Wall Street darling, was becoming a household name.

Investor exuberance waned later that week, dropping the chip designer out of the trillion-dollar club in short order, just as former members Meta and Tesla had fallen before it, but it was soon back in the club, and in mid-June, investment bank Morgan Stanley forecast Nvidia’s value could continue to rise another 15% before the year is out.

Unlike most of its trillion-dollar tech cohorts, Nvidia has less consumer brand awareness to go on, making its Wall Street leap more mysterious to Main Street. How Nvidia got here and where it’s going next sheds light on how the company has achieved that valuation, a story that owes a lot to the rising importance of specialty chips in business—and accelerating interest in the promise of generative AI.

Graphics driver

Nvidia started out in 1993 as a fabless semiconductor firm designing graphics accelerator chips for PCs. Its founders spotted that generating 3D graphics in video games—then a fast-growing market—placed highly repetitive, math-intensive demands on PC central processing units (CPUs). They realized those calculations could be performed more rapidly in parallel by a dedicated chip rather than in series by the CPU, an insight that led to the creation of the first Nvidia GeForce graphic cards.

For many years, graphics drove Nvidia’s business; even 30 years on, graphics cards for gaming, including the GeForce line, still account for over a third of its revenue, making it the biggest vendor of discrete graphics cards in the world. (Intel makes more graphics chips, though, because most of its CPUs ship with the company’s own integrated graphics silicon.)