Nvidia’s share price has more than tripled this year. Expectations of unprecedented demand for artificial intelligence chips have pushed the US chip designer to a market capitalisation of more than $1tn. So why have Asian chipmakers — the companies that make all of Nvidia’s chips — reported their lowest earnings in years?
The risks facing the global advanced chip industry should provide an important reality check for the investors who believe Nvidia’s record-beating rally can continue.
Nvidia’s advanced chips are essential for powering the new generation of AI-related tech, from ChatGPT to autonomous driving. These chips, or graphics processing units, are thousands of times faster than general purpose chips when applied in AI models and account for most of its sales.