Nvidia is an AI superpower. It started at a Denny’s

Nvidia and its high-flying stock have exploded on the market over the past year, as the AI craze — and the expensive chips Nvidia sells to power AI models — brought a special sparkle to investors’ eyes.

At the same time, Nvidia’s rise has ignited fears of an AI bubble. But unlike companies in the dot-com era, Nvidia is supported by strong business fundamentals — the company posted first-quarter revenue growth of 270% over 2023 — that have Wall Street coming back for more.

The $2 trillion dollar company had humble beginnings. Its now-billionaire founder and CEO Jensen Huang worked as a dishwasher to make money as a teenager, and the company almost went bankrupt in its first two years.

Now Nvidia stock is up a whopping 87% so far in 2024, 223% over the last 12 months, 1,793% over the last five years.

Let’s take a look at Nvidia’s rise from its start at a Denny’s restaurant to the third-most valuable company on earth.

Jensen Huang and his friends, Chris Malachowsky and Curtis Priem, decide to start Nvidia over a meal at Denny’s — the chain where Huang worked as a dishwasher during his teenage years. Nvidia doesn’t have a name when it first launches, but its founders later settle on the Latin word for “envy” — invidia — without the “i.”

Nvidia goes public for $12 per share and launches its first chip, the NV1. It’s a first-of-its-kind computer graphics processor to support multimedia features in gaming. Nvidia sucks up $10 million to develop the chip from Sequoia Capital and Sutter Hill Ventures, but the product isn’t popular. The company has to lay off half its staff amid the challenges.

By 2007, Nvidia stock has surged more than 2,000% since its IPO, with profits climbing 50% annually. That success gains Nvidia a lot of attention — so much so that it’s recognized as Forbes’ company of the year. At the time, Nvidia remains primarily focused on the gaming industry, manufacturing graphics cards for the PlayStation 3.

Nvidia says that, by 2011, “AI researchers around the world had discovered NVIDIA GPUs.” (GPUs are graphics processing units, the advanced chips that power the large language models behind AI chatbots like ChatGPT.) In 2012, that statement becomes even more true. A graduate student at the University of Toronto, Alex Krizhevsky, develops deep learning technology that runs on Nvidia GPUs, catching the attention of tech giants like Facebook, Amazon, and Microsoft. The development in AI “deep learning” sets the stage for modern, generative artificial intelligence technology.

Nvidia announces its A100 GPU, a new chip that could boost the performance of AI training up to 20 times compared to its older GPUs. Nvidia calls it “the company’s largest leap in performance to date.”

Microsoft Azure, Amazon Web Services, Google Cloud and other cloud providers go on to adopt the A100 GPU for their supercomputers and data centers.

By the end of 2023, half of Nvidia’s revenue comes from data centers using its GPUs for AI computing. Its chips are used by both Big Tech firms and governments across the world. The company’s stock begins its huge rally in 2023, which continues into 2024 — putting Nvidia at the tippity-top of the so-called “Magnificent Seven” tech stocks.

In February of 2024, Nvidia reports record fourth-quarter sales, 270% higher than in the prior year.

And in March, Nvidia releases a highly-anticipated new processor, the “Blackwell” chip, named after mathematician David Blackwell, the first Black scholar inducted into the National Academy of Sciences.