One of the world’s most valuable companies was founded at a Denny’s in San Jose, Calif., in 1993.
The story goes that three engineers were drinking bottomless mugs of coffee as they griped about problems with their employers, and eventually arrived upon a problem they could fix: A new wave of video games and computers were going to require new processing power.
It would prove to be a lucrative foresight: Starting out with US$40,000 to its name, Nvidia Corp. (first called NV, for “next version”) is now worth more than US$3-trillion – and earlier this week overtook Apple Inc. as the world’s second-most valuable company.
In today’s edition, we take a quick look at how that computes:
- What’s next for Nvidia and the AI industry
- On Bay Street, big changes are already underway
- An open apology, and more stories to watch
But first: A quick thanks to everyone who sent me their thoughts on the rate cut, the newsletter and Sheryl Crow. Yesterday, we looked at the BoC. Today: Nvidia. We’ll mainly dig a bit deeper into one story a day but we’ll also be nimble enough to offer more mix when it’s called for. Keep the emails coming: cwilsonsmith@globeandmail.com
Apple now; Microsoft next?
Nvidia-mania has been sweeping the globe. Chief executive Jen-hsun Huang got the rockstar treatment earlier this week in Taiwan.Ann Wang/Reuters
Two of those engineers – co-founder Chris Malachowsky and CEO Jen-hsun Huang – are still running the chip ship. The other, Curtis Priem, felt he had an “excessive amount of money” after the company went public in 1999, and poured it into charity. Forbes estimates his fortune is by no means modest – US$30-million – but it could have been somewhat larger had he held onto his stake: US$70-billion.
The company founded in that dingy diner a few decades ago now sits behind only Microsoft on the list of most valuable companies, and commands such a wide reach across sectors that its quarterly reports have become a significant economic event.
Not that Nvidia is lacking relevance on any particular day ...
- But the company is poised to split its stock 10-for-one today in an effort to bring in more individual investors.
- That means one stock now will be worth the same amount, but spread over 10 shares.
And its valuation leap over Apple represents a big shift in the Silicon Valley that the iPhone maker has dominated for so long.
But Nvidia is neither Ndomitable nor Nvincible
OpenAI, Microsoft and Google are spending so much on Nvidia chips that the company can’t make them fast enough. That demand was underlined, bolded and highlighted when it reported its latest earnings at the end of May: revenue of US$26-billion, up 18 per cent from the last quarter and a mere 262 per cent from a year ago.
- This sounds like great news for Nvidia, but some investors are nervous about the stability of that kind of growth – especially as its biggest customers build out their own chips.
- Add to that news that the U.S. is looking to (gasp!) regulate the trio of Nvidia, Microsoft and OpenAI.
- The U.S. Justice Department and the Federal Trade Commission are reportedly launching antitrust investigations into the dominant positions the three companies hold in the AI industry.
Taken together, it could mean the AI stars can only rise for so long.
AI heads to Bay Street
No, this isn't Bay Street. YET. The AI-powered robot Sophia is rolling the streets of Geneva in this picture. But where is she going? We're just asking questions.Salvatore Di Nolfi/The Associated Press
The AI challenge (or opportunity, depending on your perspective) is growing among Canadian businesses.
Sairam Sanathkumar, an associate at the law firm Aird & Berlis LLP, told me his firm has seen increased activity in the AI space.
“The last year or so has seen an uptick in companies across stages of growth in Canada adopting AI either out of necessity or to digitize key functions and ‘not miss the bus.’ ”
While the Canadian government has pledged to pump money into research and development even as it navigates its own regulatory future in the space, the ball is currently in Bay Street’s court – and they have every reason to play fair.
“Those who deploy AI transparently and ethically will have a higher success rate, particularly in functions that impact human lives,” Sanathkumar said. “Transparency, however, is achievable only with AI skills and expertise, robust governance of AI models, and reduced data complexity.”
While the growth of AI among businesses in Canada could spur privacy challenges, Sanathkumar said there is an upside to embracing the technology: “The flip benefit is that AI can deliver highly personalized information to people that is more persuasive than traditional methods of communication.”
Have you seen the use of AI at your workplace, or someone else’s? Want to talk about the good? The bad? The off-the-record? Email me: cwilsonsmith@globeandmail.com
An apology
In yesterday’s newsletter, I claimed Sheryl Crow has the best version of “The First Cut is the Deepest.”
I invited arguments, and expected them to be made for Cat Stevens, P.P. Arnold or even Rod Stewart. I would have stood my ground (on a song I didn’t even know I had opinions about until yesterday) were it not for the readers who alerted me to the version by Keith Hampshire, a Canadian singer whose most recognizable work might be as the voice of the “OK, Blue Jays” song.
Keith Hampshire (in the white suit) sang it best.Supplied
It rules. Listen for yourself here.
We regret the error.
Also making waves today
Streaming wars: The U.S. is criticizing a new directive from the CRTC to streaming companies such as Netflix and Spotify to put 5 per cent of their Canadian revenues back into Canadian content.
- The Globe’s Barry Hertz says the decision should be applauded.
The rate decisions? The European Central Bank followed Canada with its own rate cut yesterday. Will the Fed follow suit if the U.S. is in a stronger position? Mark Rendell writes on the wrinkles in timing.
- We’ll get a fresh checkup on the U.S. economy’s health with its May jobs report this morning.