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The company’s graphics chips are mainly used for gaming, alongside professional applications such as 3D design. But an increasing number of its chips are being installed in data centers to help companies like Microsoft Corp., Alphabet Inc., OpenAI, and Amazon.com Inc. build their AI capabilities and offer those services to clients.
Last year’s release of ChatGPT ignited a frenzy of interest in generative artificial intelligence — AI that creates content instead of just analyzing information. Nvidia’s leadership position caught the attention of investors, who returned to the stock after getting cold feet following a massive rally in 2021.
One way to assess a company’s technological prowess is to see how much pricing power it has with customers. That can be measured by looking at gross margin — the markup it makes atop the cost of building the product. Intel Corp.’s heyday was during the PC and laptop eras. Today Nvidia holds the crown, with the high profits on AI chips and computers driving it to record profitability.
