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Nvidia: Everything to know about the chipmaking powerhouse

Nvidia (NVDA) has been the talk of Wall Street for a couple of months as the company helped lead the S&P 500 (^GSPC) to record numbers and amazed investors with its semiconductor innovations. With so much going on with the company, it can be hard for new investors to keep track.

Yahoo Finance Tech Editor Dan Howley joins Wealth! to break down everything investors need to know about Nvidia but are too afraid to ask.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video transcript

BRAD SMITH: Financial world has lit up over the past year plus with talk of artificial intelligence. And one company's name seems to pop up more than others here, Nvidia. Shares of the AI darling are up over 200% over the past 52 weeks.

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Now you might have heard coworkers or friends talking about their confidence in the stock, whether that be at the water cooler or at the barbecue and thought to yourself, wait, I don't even really know what Nvidia does. Well, have no fear, because our very own Dan Howley is here with me in studio to tell you everything that you need to know about Nvidia but we're too afraid or some might be too afraid to ask Dan. So

Let's start broadly just tell us what Nvidia is how long, it's been around and what exactly they do.

DAN HOWLEY: Yeah. This is dedicated to my dad, who probably thinks that Nvidia is some kind of, I don't know, laxative or something, like that. I don't know. He's-- yeah.

Anyway, so Nvidia was founded in 1993 with the, the basic goal of running graphics processors, right, so the processors that would power PC video games. They eventually started working with the likes of Microsoft and Sony. They credit themselves with creating the first graphics processing unit. And so they really were basically meant for gaming.

And I think the idea that they are in AI now has to do with two major milestones. There was one in 2006 when they released their CUDA software. It's basically a software that allows developers to take a GPU and let it run general processing.

So you would have a CPU, your central processing unit, what we usually call the brains of the computer, doing the general processing normally. A GPU though allows for what's called parallel processing. So rather than in a CPU you have a certain number of lanes that are doing tasks, on a GPU you can have far more lanes running the same data at the same time or, or data at the same time so that you're able to complete tasks much faster. So that goes into this whole AI thing.

In 2012, a pair of researchers, including one future executive at a board member at OpenAI, they were able to use Nvidia GPUs to form neural networks, AI neural networks and, and find a picture of a cat or pull up a picture of a cat, and so identify a picture of a cat. And so from there, Nvidia was like, OK, well this seems really good, why don't we start investing in this. And so they started going whole hog into this.

And at that point, everyone thought that Jensen Huang, the CEO, was a madman. You have all this money that you're making billions of dollars on video games, just stick to what you know, man.

BRAD SMITH: Sure.

DAN HOWLEY: And so they ended up pouring money into this, and lo and behold, ChatGPT hits OpenAI with-- blows up and now all these companies are just clamoring to get these chips.

BRAD SMITH: So it's not just Nvidia alone out there we got to remember. Who are some of their biggest competitors?

DAN HOWLEY: Yeah. I mean some of the big competitors are really the names that you already know and love or maybe don't love, I don't know, Intel and AMD. AMD is probably its biggest competitor, and has been for years. They, they used to have a-- they have a graphics card arm as well of a CPU arm. So they're basically fighting Nvidia and Intel at the exact same time in different spaces. But the idea is that they have a new chip called the MI Series, the MI300 Series. And so they say that can compete with Nvidia's chips.

Intel has its Gaudi Series, its Gaudi 3 chip. It says it can compete with Nvidia's chips. But they don't account for Nvidia's new Blackwell chips. So Intel and AMD, they were focused on Nvidia's Hopper Series of chips, the H100, the H200, there's a lot of numbers and letters. But basically what it means is Nvidia had a chip. Everybody was gunning for it. They got close or next to it. But then Nvidia said, you know, hold my beer, I'm going to go ahead and come out with an even better one.

So, so these companies are trying. It's also their customers. Their customers are building chips now. So Google, Microsoft wants to build it, they're not there, Amazon. So they're, they're all trying to get into this to try to beat Nvidia in some way.

BRAD SMITH: Just lastly. We had mentioned the stock price over the past 52 weeks. How is Nvidia actually been performing as of late? We think about this year-to-date and what investors should expect going forward today?

DAN HOWLEY: Year-to-date, they're up 70%. Over the last 12 months, they're over 200%. They make everything else look like it's just standing still. Even Meta, which jumped massively after they announced that dividend and that, that share buyback plan, they, they went gangbusters. I think they went up 20% on the day when that was announced, but makes them look absolutely ridiculous, Nvidia just absolutely dominating.

And just, just quickly to put a point on how good they're doing as far as revenue goes. In their last quarter, they had $22.1 billion in revenue. That was up from $6.1 billion in the same quarter the prior year. And their full year of revenue last year was $27 billion. So in the last quarter they nearly hit all of the revenue for the prior year. And we're expecting them to obviously have another bang out quarter.

I think the problem comes when you start lapping this, right? This explosive growth doesn't last. People are going to say, well, where's where's my 300% growth, or whatever, and, you know, it's law of large numbers, people. So, yeah.

BRAD SMITH: Yeah. It creates tough comps for sure here and we're going to be watching closely when the company does report their next earnings slate here. We know that is set to come May 22nd as well here.

Dan Thanks so much appreciate it.