Cyber Monday Sale! 50% Off All Access

In Just 5 Words, Nvidia CEO Jensen Huang Summed Up the Company's AI Chip Dominance Strategy Nvidia's chips are the brains of ChatGPT.

By Sherin Shibu Edited by Melissa Malamut

Key Takeaways

  • Nvidia makes processing chips that power complex AI, including ChatGPT.
  • Nvidia CEO Jensen Huang addressed the rising competition Nvidia faces at an annual shareholder meeting on Wednesday.
  • Huang said Nvidia's strategy was to make AI chips that have the "lowest total cost of ownership" — which doesn't just refer to the chip's price tag.

The first question Nvidia CEO Jensen Huang had to answer at the AI chipmaker's annual shareholder meeting on Wednesday was how Nvidia handles rising competition.

Though Nvidia indisputably leads the AI chip market, with more than 80% of market share, competition has intensified. Established tech giants like Intel and AMD and rising startups like Etched, Cerebras, and D-Matrix are all vying for room in a highly lucrative space worth billions.

About 40% of Nvidia's revenue is believed to come from just four companies: Microsoft, Meta, Amazon, and Alphabet. All of those companies have the means to fully develop AI chips on their own one day.

Related: Nvidia Long-Term Employees 'Semi-Retired' Multimillionaires

So Nvidia's current customers could one day be its biggest competitors.

Huang addressed the threat of competition without calling out any rival in particular on Wednesday. In response to a shareholder question, he said Nvidia's strategy was to make AI chips that have the "lowest total cost of ownership."

Those five words don't necessarily mean that Nvidia's chips, which cost upwards of $30,000 apiece, are the cheapest on the market.

Instead, Nvidia's chips could present a "lowest total cost" overall when potential customers consider performance, the cost of running the chips, and their wider reach.

"The NVIDIA platform is broadly available through every major cloud provider and computer maker, creating a large and attractive install base for developers and customers, which makes our platform more valuable to our customers," Huang said, per CNBC.

Nvidia CEO Jensen Huang. (Photo by SAM YEH/AFP via Getty Images)

Nvidia's chips have been around for 30 years, but until recently, they were used as graphics cards.

Huang believed that the chips could do more. In 2016, he asked his team to use the chips to build an AI server, which ended up being as big as a briefcase and cost $129,000 to make. He then hand-delivered the server to OpenAI as a gift.

Tens of thousands of Nvidia's chips now power OpenAI's ChatGPT.

Huang emphasized at the meeting that Nvidia had a head start on AI chips because it started investing in the technology a decade ago, pouring billions of dollars into the effort and adding thousands of engineers to work on it.

That first-mover advantage has paid off. Nvidia is now one of the world's most valuable companies, hitting a $3.338 trillion valuation last week.

Related: Amazon Joins Apple, Nvidia, Microsoft, Alphabet in $2T Club

Sherin Shibu

Entrepreneur Staff

News Reporter

Sherin Shibu is a business news reporter at Entrepreneur.com. She previously worked for PCMag, Business Insider, The Messenger, and ZDNET as a reporter and copyeditor. Her areas of coverage encompass tech, business, strategy, finance, and even space. She is a Columbia University graduate.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

'I Stand By My Decisions': A CEO Is Going Viral For Firing Almost All of the Company's Employees — Here's Why

The Musicians Club CEO Baldvin Oddsson fired 99 workers at once over Slack for missing a morning meeting. But there's a catch.

Fundraising

Venture Capitalists Are Pickier About What They Invest In — Here's How That Actually Benefits Startups

While hefty funding rounds often equate to success, a growing trend shows that leaner investments foster stronger, more resilient startups, prioritizing innovation over hype and creating sustainable growth.

Making a Change

Get Babbel at Our Unbeatable Price This Cyber Monday

Learn up to 14 new languages with lifetime access.

Business News

'If It Seems Too Good to Be True It Probably Is': $18 Million Worth of 'Great Deals' Confiscated By Border Cops

A shipment of 3,000 fake Gibson guitars from Asia was seized at the Los Angeles-Long Beach Seaport.

Franchise

You Can Start These 10 Franchises for $10,000 or Less

Many budget-friendly franchise opportunities are in industries with high demand, such as home services, cleaning or mobile businesses.