The Company That Makes the Chips Behind AI Is Now Worth a Trillion Dollars

Nvidia, whose graphics chips turned out to be the best way to build and run AI programs, crossed a $1 trillion market value today, joining Apple, Microsoft, Alphabet and Amazon. Its stock has nearly tripled this year.

Nvidia's shares crossed the line this morning that made it a trillion-dollar company, only the fifth American company to get there, and the first whose product most of its shareholders could not describe. Nvidia makes chips. Specifically, it makes the chips that were designed to draw video-game graphics and turned out, almost by accident, to be the best hardware in the world for building and running AI programs.

The reason is arithmetic. Training a program like the one behind ChatGPT means doing an almost unimaginable number of simple calculations, and a graphics chip is built to do thousands of simple calculations at once rather than one complicated one at a time. When researchers discovered this a decade ago, Nvidia leaned into it, building software and specialized versions of its chips for the purpose. Today there is no serious alternative, and every company racing to build AI is racing to buy from the same supplier. Last week Nvidia told investors it expected to sell about $11 billion of chips this quarter, half again what Wall Street had guessed, and the stock jumped a quarter in a day.

The comparison people are reaching for is the gold rush: the people who reliably got rich were the ones selling shovels. It is a fair analogy with one difference. The gold rush had many shovel sellers.

The number will move — trillion-dollar valuations come and go with the market's mood — but the position won't, at least not soon. For the moment, the AI boom has one indispensable company, and it isn't any of the ones making the AI.