After an explosive year of growth in 2023, the artificial intelligence market is poised for extraordinary continued expansion in coming years, with an estimated compound annual growth rate of 37% through the decade’s end. According to Grand View Research, the AI market could be worth a staggering $1 trillion within five years.¹

Leading this charge is Nvidia, a company whose shares hit all-time highs in late December and early January and whose total value has skyrocketed 245% since last January, firmly establishing it as the go-to hardware provider for AI developers worldwide.2 3 The pivotal role of Nvidia’s graphics processing units (GPUs) in training and running AI models has driven an unprecedented demand surge, with the company commanding a 95% share in the machine-learning GPU market.

As 2023 drew to a close, Nvidia emerged as one of the best-performing S&P stocks, outshining even its closest competitor, Meta. The outlook remains bullish for Nvidia, as S&P Global predicts generative AI application revenues will surge from $3.7 billion to $36 billion by 2028. This presents a golden opportunity for Nvidia, with its GPU chips integral to training AI models like OpenAI’s ever-evolving chatbot, ChatGPT.⁴

The symbiotic relationship between Nvidia’s innovative processors making the AI industry possible, while AI demand fuels Nvidia’s dramatic growth, means that Nvidia is well-positioned to solidify its market-leading position in the burgeoning AI market.

How Nvidia’s Products Are Fueling the AI Industry

So, how has Nvidia managed to become the driving technological force behind AI innovation?

Now positioned as a major player in the AI gold rush, Nvidia’s graphics-processing units (GPUs) were originally designed to allow for more complex, more realistic graphics for PC and console gaming. It was Nvidia’s strategic pivot towards AI in 2013, backed by promising research from the academic computer science community, that proved prescient.

Those same GPUs meant for gaming have become indispensable for cutting-edge AI applications. Nvidia’s chief innovation was developing processors that excel at parallel computing, enabling the simultaneous processing of complex mathematical tasks. This unique approach, which breaks away from more linear CPUs of the past, sets Nvidia’s technology apart in the AI landscape.

Nvidia’s latest AI training module, the DGX H100, for example, boasts unparalleled processing power, with demand soaring since the public release of ChatGPT in late 2022. The DGX H100, running five times faster than its predecessor, underscores Nvidia’s commitment to meeting and driving the escalating demand for advanced AI models. The company anticipated sales of half a million DGX H100 units (each with a price tag of $500,000) by the end of 2023.⁵

Nvidia’s success is not confined to AI alone; the company has consistently innovated, venturing into diverse markets for its processors, from self-driving electric cars to Bitcoin mining. And the company has pivoted to producing AI-dedicated processors using its GPU technology, like the updated H200 processors, designed specifically for training AI models.⁶

This adaptability, coupled with the continuous evolution of its high-power computing solutions and the insatiable demand for its AI tools, positions Nvidia at the forefront of the sector.

How does AI Affect Nvidia?

The relationship between Nvidia and a booming AI industry is reciprocal, with Nvidia experiencing remarkable financial success in 2023 thanks to the unrelenting demand for its processors to power AI applications.

In May 2023, the company achieved a milestone by joining the prestigious $1 trillion club.⁷ Its Q3 results surpassed analyst expectations by more than $2 billion, reporting a staggering 206% year-over-year revenue growth, reaching $18.12 billion.⁸ Particularly noteworthy was data center revenue, which grew 279% YoY to reach $14.51 billion—half of which originated from cloud infrastructure providers such as Amazon.⁹

Demand for Nvidia’s processors continues to outstrip supply, with no signs of letting up. Barclays analysts report that AI customers are beginning to adopt the full Nvidia platform to receive priority shipments of processors and sidestep supply constraints.10 This furthers Nvidia’s strategy to develop a “sticky” ecosystem of solutions that will enable them to address the advanced computing needs of their customers.

And despite the threat of growing competition, Nvidia’s early move into GPUs for the AI market means the company remains years ahead of chip rivals like Advanced Micro Devices and Intel.11

And because of their lead, Nvidia has already captured a substantial number of cloud service providers, including Microsoft, Amazon, and Google, whose own AI processors have been developed to work with Nvidia chips. As a result, Nvidia’s outlook for 2024 is for continued robust financial performance, with the company projecting growth of more than 230% for the year ahead.12

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  1. Cook, D., “Better Artificial Intelligence (AI) Stock: Nvidia vs. Alphabet,” Yahoo Finance, January 9, 2024;
  2. “Wall Street Bullish on Nvidia and AMD as AI Chip Prospects Soar,”, January 16, 2024;
  3. Cook, D., “Better Artificial Intelligence (AI) Stock: Nvidia vs. Alphabet,” Yahoo Finance, January 9, 2024;
  4. Carter, R., “Why is Nvidia Stock Going Up? The Rise of Nvidia,” XR Today, January 2, 2024;
  5. Witt, S., “How Jensen Huang’s Nvidia Is Powering the A.I. Revolution,” The New Yorker, November 27, 2023;
  6. Carter, R., “Why is Nvidia Stock Going Up? The Rise of Nvidia,” XR Today, January 2, 2024;
  7. Mozée, C., “NVIDIA achieves $1 trillion market cap for the first time as AI-fueled stock surge continues,” Markets Insider, May 30, 2023;
  8. Carter, R., “Why is Nvidia Stock Going Up? The Rise of Nvidia,” XR Today, January 2, 2024;
  9. Cook, D., “Better Artificial Intelligence (AI) Stock: Nvidia vs. Alphabet,” Yahoo Finance, January 9, 2024;
  10. “Wall Street Bullish on Nvidia and AMD as AI Chip Prospects Soar,”, January 16, 2024;
  11. Cook, D., “Better Artificial Intelligence (AI) Stock: Nvidia vs. Alphabet,” Yahoo Finance, January 9, 2024;
  12. Carter, R., “Why is Nvidia Stock Going Up? The Rise of Nvidia,” XR Today, January 2, 2024;
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