Source: Wall Street See

Every wave of technological revolution creates a myth of wealth creation, and 'Leather Guru' Huang Renxun caught this great opportunity to get rich.

On June 5th EST, Nvidia's stock price skyrocketed, breaking through the $3 trillion market cap threshold and becoming the second largest company in the world by market value, surpassing Apple.

The next day, Nvidia's stock price slightly fell, but this did not prevent its momentum from surpassing the $2 trillion market cap threshold in just 66 trading days.

Based on June 6th closing price, Nvidia only needs to rise 6% more to surpass Microsoft and become the world's most valuable company. Some investment banks predict that Nvidia's ascension to the top is almost certain, and it will be achieved as soon as next week's stock split is completed.

This seems like a metaphor - the age of AI has definitely arrived.

Strong market demand and investors' enthusiasm have lifted Nvidia to the throne. However, the market also increasingly worries whether the next 'Cisco moment' will come. Once Nvidia shows signs of decline in sales and profit margins, the carnival will be over and quietness will return.

At a high altitude, Huang Renxun must seize the opportunity offered by AI and make Nvidia the core infrastructure of the AI era, tightly bound to a host of technology companies, in order to sit firmly on the throne in this new era.

soaring

Nvidia has achieved an unprecedented myth in the US stock market. Previously, it took more than two years for Apple's market value to increase from $2 trillion to $3 trillion, and Nvidia created a miracle in three months.

Meanwhile, CEO Huang Renxun's net worth has also soared, breaking through $100 billion and becoming one of the 'super-rich' on Forbes' global rich list with assets exceeding $100 billion.

The skyrocketing of Nvidia's market value is due to the gradual dissipation of the market's divergence towards it. Its eye-catching performance, stunning products, and the stimulus of stock split have made Wall Street believe that it can continue to break through the 'ceiling'.

From the perspective of performance fundamentals, Nvidia's total revenue in the first quarter was $26 billion, more than three times that of a year ago. Nvidia, which sells 'AI weapons', is gradually approaching the peak, and this number will continue to climb to $28 billion in the second quarter.

On June 2, Huang Renxun, who appeared at the 2024 Taipei International Computer Show, became the brightest 'star' in the room. He announced that Blackwell, which had been released for less than three months, was already on the way to mass production. Also, Nvidia will release a new generation of products every year, with the three-year upgrade plan revealed: Blackwell Ultra in 2025, Rubin new architecture in 2026, and Rubin Ultra available in 2027.

At the same time, to continue to consolidate its moat, Nvidia has long turned itself into an 'AI factory'. In his speech, 'Leather Guru' showed a powerful ecology. Based on GPU and CUDA, users can continuously link computing power using various chips and devices to form a huge data center and become the 'power plant' of the AI era.

Nvidia's 'sunshine' strategy is to firmly bind a host of technology giants to its 'AI ecosystem', leaving no breathing space for its competitors, whether it is the ultimate pursuit of the software and hardware ecosystem or the annual upgrade rhythm.

Wall Street is excited about this, with Bank of America raising Nvidia's target stock price to $1,500. Analysts believe that AI is now developing at a high speed, and many top technology and cloud computing companies are still in the experimental stage of training large-language models, so the AI peak in the chip industry has not yet arrived. It is estimated that the global data center's computing power update demand will require an investment of around $250-500 billion per year and is only 20-30% complete. It will take 3-5 years to complete.

Institutions generally believe that Nvidia will surpass Microsoft to become the world's most valuable company, it's only a matter of time. However, Huang Renxun hopes to add more fuel to the fire. Recently, Nvidia announced a stock split to be completed on June 7th, allowing more individual investors to join the fast track and provide impetus for stock price to continue to rise. The stock split will also make it easier for Nvidia to join the Dow Jones Industrial Average and consolidate its position in the US capital markets.

High up, Huang Renxun wants to leverage the AI boom to make Nvidia the core infrastructure of the AI era, and bind a host of technology companies to himself to sit firmly on the throne in this new era.

Not long ago, Nvidia announced that it will split its stock 1-for-10 on June 7th, allowing more individual investors to join the fast track and provide impetus for stock price to continue to rise. The stock split will also make it easier for Nvidia to join the Dow Jones Industrial Average and consolidate its position in the US capital markets.

This series of layouts are all-round preparations made by Huang Renxun for Nvidia to become the "number one player" in the global capital markets.

Challenge

From the current perspective, Nvidia is undoubtedly a highly sought-after gem. In the past five years, Nvidia's stock price has risen nearly 30 times, and it has also soared more than 150% this year.

The story of an elephant's dancing has occurred many times on the US stock market, but the speed of Nvidia's rise still astonishes investors. From the idea of creating Nvidia with other founders at a Silicon Valley chain restaurant in 1992, to becoming a giant today, Huang Renxun's Nvidia has also wavered on the brink of bankruptcy several times.

Investment banks also worry that the AI bubble may be approaching a critical point and that Nvidia may experience a "Cisco moment" again.

As the "arms dealer" of the last Internet revolution, Cisco's market capitalization evaporated by about 90% in the years following the bursting of the Internet bubble and has never returned to its peak.

The market is constantly changing, and semiconductors are also an industry with extremely strong cyclicity. Whether it's cryptos or the gaming trend during the epidemic, Nvidia has experienced significant fluctuations in revenue and profits under short-term demand surges.

At present, Nvidia is still in a state of high revenue and profit margins, and its products are in high demand.

However, the existence of cycles indicates that if Nvidia wants to continue to break historical records, both its sales and profit margins must maintain an upward trend while also building its castle walls higher. On the way to the top, Nvidia is confronting a series of problems, including industry trends, attacks from competitors, and resource bottlenecks.

At the present juncture, Nvidia occupies more than 70% of the market share for AI training chips, and its GPU market share in data centers is an overwhelming 92%. This huge AI cake is difficult to resist for its competitors.

AMD CEO Lisa Su bluntly pointed out that Nvidia's monopoly seems to go against the will of the industry, and "I don't believe in (Nvidia's) moat explanation. It is important whether customers have the right to choose. They actually hope to have more hardware opportunities to try."

Soon after, in early June, AMD launched the new MI350X AI acceleration chip, which has several times the memory, bandwidth, and computing performance of Nvidia's most powerful AI chip H200, and like Nvidia, AMD also plans to release a new product every year. Intel also revealed that its Gaudi 3 AI chip will be priced well below its competitors and is expected to launch on a large scale in the third quarter of this year. According to official positioning, this chip's performance is 1.5 times that of Nvidia H100 and is equivalent to H200.

Not only that, but Nvidia's major customers like Microsoft, Amazon, Google, Meta, and others, who have no better options, have begun to "make their own weapons" by designing their own AI chips and commissioning manufacturers to produce them, trying to break away from their reliance on Huang Renxun's Nvidia.

More importantly, after experiencing a large-scale battle in optimizing large models, both tech giants and AI startups have entered a calm period of seeking landing scenarios for their models.

In other words, in this grand "arms race," players must rethink the practical issue of achieving profitability. If commercialization is not achieved in time, Nvidia is likely to fall into the cycle again.

Standing at the peak of the industry and being swept along by trends, Huang Renxun has no retreat. He must wage a safeguarding war for AI infrastructure and wait for the industry average to return to normal and high profit margins to ebb, so that he can still stand out among his peers.

At the current juncture, Huang Renxun's Nvidia occupies more than 70% of the market share for AI training chips, and its GPU market share in data centers is an overwhelming 92%. This huge AI cake is difficult to resist for its competitors.

Editor/ruby