The shortage of high-end chips, which are key to generative AI systems, is creating intense competition that is spurring the search for computing power and alternative solutions. Some companies are waiting up to 6 months for graphics processing units (GPUs) that enable data processing and generative AI.
Businesses across various industries are engaging in a fierce competitive battle to integrate AI into their business operations. The availability of tens of thousands of advanced graphics chips plays a key role for companies involved in training large-scale AI models capable of generating original text and analysis. Without these chips, progress on the language models that underpin AI operations is slowing significantly. According to UBS analysts, for example, an earlier version of ChatGPT required approximately 10,000 graphics chips.
Nvidia, which is responsible for approximately 80% of GPU production, recently announced plans to increase its supply capacity in response to growing demand. The company has also increased production of its H100 chip, a high-end processor designed specifically for generative artificial intelligence. Launched in 2022, the H100 is one of the most powerful and expensive chips, priced at approximately $40,000 apiece. Nvidia's major competitors in this area include Intel, Advanced Micro Devices (AMD) as well as proprietary AI chips developed by companies such as Amazon, Meta (formerly Facebook) and Google.
Over the course of this year, Nvidia stock has seen a remarkable rise of nearly 180%. Last Thursday, the company recorded an extraordinary surge in market value of a staggering $183.8 billion, marking the third-largest single-day gain for a U.S. company. Today, Nvidia's market capitalisation has surpassed $1 trillion, putting it in an elite club alongside renowned giants such as Apple, Microsoft, Amazon and Alphabet, the parent company of Google.
In addition, this year's more than 7% increase in the S&P 500 Index was supported primarily by the performance of the 20 major companies in the index. Many of these titles are at the center of the buzz around artificial intelligence, which has spread rapidly following the widespread popularity of ChatGPT. These major companies include Apple, Microsoft, Amazon, Nvidia, Meta (formerly Facebook), Alphabet and AMD.