What CTOs can Learn from the Surge of Nvidia’s AI Dominance

While orgs worldwide are trying to harness and integrate AI functionality into every fabric of their product suite, NVIDIA has masterfully capitalized on AI, turning it into a significant profit driver.

Once singularly known as a gaming company, the tech magnate has now positioned itself as a dominant force in the AI industry, and as of February 2024, is world’s fourth most valuable company. How did NVIDIA solidify a near-monopoly in the AI hardware value chain? What can CTO’s learn from their rapid rise to excellence?

How did NVIDIA AI become the top chipmaker?

NVIDIA may not be a household name to all, but less than a year ago this US-based computer chip manufacturer set the metaphorical tech town ablaze. The companies revenue rose at an average annual rate of 54 percent from $16.7 billion in FY’21 to $61 billion in FY’24 from the rising demand for AI.

NVIDIA’s path to superstardom in the AI economy began with a happy accident. The company designs graphics processing units (GPUs), intended to process graphics. For a long time, these chips were mostly used in computer gaming, where NVIDIA still saw great success.

These GPUs can run multiple calculations at once instead of in a sequence. The same set of calculations proved helpful in training and deploying AI systems. The remarkable increase in demand for NVIDIA’s chip led to what could be the largest single-day escalation in an organization’s value. Moreover, the demand for AI chips has allowed the company to command premium prices. Some H100 chips reportedly fetch upwards of $40,000 on the open market. This pricing power is reflected in the company’s financials, with adjusted gross margins reaching 79.1% in the first quarter.

That being said, competition is mounting, with other players, including AMD and Intel, doubling down on the space. Big tech giants like Google and Amazon—who happen to be among Nvidia’s largest customers—are also trying to design their own AI silicon. 

Upcoming developments by NVIDIA

NVIDIA doesn’t appear to be resting on its laurels of AI dominance. Soon, it will launch the H200, which the company website boasts as ‘the world’s most powerful GPU.’ Expected to be available in 2024 itself, the new class chip boasts unparalleled capability with more memory bandwidth and capacity, improving its ability to handle intensive generative AI task. This latest offering seeks to sustain NVIDIA’s top position in the AI market.

Moreover, NVIDIA holds the advantage of owning CUDA (Compute Unified Device Architecture) technology, which performs rapid and precise calculations in graphics cards. This enables developers to create algorithms that operate on GPUs. Because of NVIDIA’s considerable head start in the industry, experts believe the company will continue dominating the market despite emerging competition.

Lessons to learn: What CTOs can do next to stay relevant in the AI era?

Just like NVIDIA, many companies will find attractive gains from embracing the AI industry, but only a few will succeed in achieving transformative value from it. As of today, some AI models (e.g. ChatGPT) may appear easy to use, and many companies are already embedding its capabilities in their offerings. But realizing the AI’s full potential requires a strategic approach. Here’s what CTOs can do to benefit from AI.

Think big

To realize the transformative value of AI, license a private version of one of the many publicly available models that can meet your business’s current requirements. You can then customize it and scale it to meet your unique needs further. You may also need to train employees who can work effectively with the AI models.

Motivate employees first

Provide incentives for innovation. When people redefine their roles with AI, reward them with new and greater opportunities. It’s about cultivating an environment where new ideas are welcomed, and out-of-the-box thinking is encouraged.

“Great ideas can come from anyone, anywhere. It’s about creating an environment where those ideas can flourish.”- Jensen Huang, NVIDIA CEO.

Set priorities methodically

AI can do so much it can be hard to know where to focus. To set priorities, consider a methodology that analyzes the value of a process, its scalability, the hours currently spent on it and the nature of the data available to support it.

Bring in the big leaders

Since AI will likely permeate the organization, all the C-suite leaders should be involved in its responsible use. Ensure that every senior leader knows their role (and their function’s responsibilities) – it will help gain trust in the AI systems. Moreover, it will set an example for the rest of the junior employees and inspire them to perform better, to achieve the same goal.

No one yet knows the long-term impact of AI on overall employment, and 2024 will still be too soon to get definitive answers. But AI will begin to change the workforce, from every vertical. And professionals who know how to use AI will outcompete those who don’t.  

But C-suite level will face even bigger challenges. Besides learning how to use AI responsibly, leaders will need the skills to oversee and assess teams in which AI agents do much of the work. Functional leads will have to understand how AI will help the organization gain the best ROI. The C-suite will have to take the lead on AI-native operations and business models. Very few leaders today have both organizational and AI knowledge — and closing this gap will be critical.

In brief

NVIDIA, once primarily known for gaming, has rapidly emerged as a dominant player in the AI industry, with its GPUs now integral to training and deploying AI systems. As organizations globally strive to integrate AI into their products, CTOs can learn from their approach to drive similar success by prioritizing AI-driven transformation.