Nvidia (NVDA) is the world leader in artificial intelligence due to its quality product portfolio. The invention of graphic processing units (GPUs) in 1999 was an influential moment in the computing industry. GPUs are essential for AI to achieve its parallel processing capabilities, so Nvidia is still a key industry player decades later and is benefitting from the boom in conversation around ChatGPT. Interestingly, ChatGPT currently runs on Nvidia’s two-year-old A100 chip, not the latest H100 or ‘Hopper’, which was released late last year. The new chip will supposedly perform AI learning functions nine times faster than the A100 chip and output (the action of an AI responding to a question or other stimulus) 30 times quicker. It also promises 3.5 times better energy efficiency and three times lower total cost ownership. When ChatGPT adopts the new chip, it is clear its capabilities will improve significantly. While Nvidia’s revenue from gaming chips fell sharply in the third quarter from the impact the pandemic had on the video game industry and cryptocurrency bear market, data centre revenue grew by an impressive 31%. With the release of the Hopper H100 chips and the start of the AI wars, we expect Nvidia to produce significant returns in 2023. ASML Holdings (ASML) manufactures lithography systems which are critical in microchip production and are heavily relied upon by Nvidia to produce their GPUs. ASML has a monopoly on a key technology used in manufacturing advanced semiconductors called extreme ultraviolet (EUV) lithography. After chip companies started producing semiconductors with new advanced specifications, there was a need for the extremely thin lasers that EUV technology contains. With AI continually making advancements, it will require chips that advance with it. ASML technology allows for these advancements and will no doubt increase purchases of its machines. Taiwan Semiconductor Manufacturing Corporation (TSM) is the world’s first dedicated semiconductor foundry and is another significant contributor to Nvidia’s GPU production, giving it a competitive edge. In Q4 of 2022, TSMC produced more than 56% of the world’s semiconductors. The management team at TSMC stressed that its highperformance computing segment for AI customers is the reason for its optimism about the semiconductor market recovering in the second half of 2023. Five major contributors to AI technology “ChatGPT currently runs on Nvidia’s twoyear-old A100 chip, not the latest H100 or ‘Hopper’, which was released late last year.” Fron t Cove r Fea t ur e 10 Finance Monthly.
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