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NEW YORK (AP) — The superstar run for Nvidia’s stock the last few years has been astonishing. So was its tumble Monday, which caused $595 billion in wealth to vanish. That’s about as much as PepsiCo, McDonalds, Starbucks and Target are worth, combined.
Mostly known only in gaming and crypto circles a few years ago, Nvidia burst into the zeitgeist after seeing its sales surge because customers wanted its chips to train their chatbots and other artificial intelligence products.
Nvidia became a household name as its stock more than tripled in 2023 and then more than doubled in 2024. Investors and analysts lauded CEO Jensen Huang as the “Godfather of AI.” Nvidia grew into a $3 trillion-plus behemoth and traded places with titans like Apple to become the most valuable company on Wall Street.
But that all came to a screeching halt Monday, at least for a moment, after a Chinese upstart called DeepSeek said it had developed a large-language model that could perform like ChatGPT and other U.S. rivals, but by using far less computing power.
Here’s a look at how it all got to this point:
How did it become a market darling?
Nvidia’s roots began in gaming.
The Santa Clara, California-based tech company’s invention of the graphics processor unit, or GPU, in 1999 helped spark the growth of the PC gaming market and redefined computer graphics. Now Nvidia’s specialized chips are key components that help power different forms of artificial intelligence, including the latest generative AI chatbots such as ChatGPT and Google’s Gemini.
Huang has dubbed AI “the next industrial revolution,” and Nvidia’s GPUs are designed to perform artificial intelligence tasks faster and more efficiently than general-purpose chips like CPUs. Tech giants are snapping up Nvidia chips as they wade deeper into AI — a movement that’s enabling cars to drive by themselves, and generating stories, art and music.
The demand helped Nvidia's revenue grow by eye-popping levels, quarter after quarter. On Feb. 23, 2023, after Nvidia breezed past analysts' expectations for quarterly profit, Huang said that “AI is at an inflection point, setting up for broad adoption reaching into every industry.” The company's quarterly revenue at the time was $6.05 billion.
That ramped up to $7.19 billion just three months later and then nearly doubled to $13.51 billion three months after that. Revenue has since vaulted to $35.08 billion in the three months through October 2024.
The company's stock price has similarly soared, and its total market value quickly passed rivals like Intel, Microsoft and others. Nvidia alone accounted for more than a fifth of all of the S&P 500 index's total return last year. No other stock came close, and it had more than triple Apple's impact.