Forgoing Today’s Profits for Tomorrow’s (Bigger) Gains
By Greg Kahn
Emerging Tech Exchange
Founder & CEO
Published on May 30, 2023
You’ve no doubt seen last week’s news about Nvidia. But you may not know the backstory of how it came to capture so much attention lately.
The chipmaker made a remarkable 26% leap in share prices in a single day, last Thursday. Nvidia's market cap now hovers around $1 trillion, putting it in the same league as Apple, Microsoft, Alphabet, and Amazon.
It’s not just that Nvidia happened to get lucky that artificial intelligence is taking off and that investors recognize the crucial need for the company’s chips to power “The AI Future.”
No, the company’s stunning rise this past year harkens back to a decision Nvidia executives made a decade ago. It’s a story of managing the practical needs of a business today while moving decisively forward to build for tomorrow.
Thirteen years ago, graphics-rich capabilities for mobile began hitting peak demand. Nvidia, along with many of its rivals, jumped on smartphone adoption in short order. But the market quickly commoditized. So Nvidia stepped away from what was, at the time, a very profitable business. It took a lot of heat in the press and from investors.
But doing so opened the door to Nvidia’s investment in promising new markets — namely, robotics and self-driving cars. While there are no headlines about robotics advances or self-driving cars — at least at the moment of this writing — Nvidia’s move into those areas are what allows it to be one of the primary makers of chips for AI programs.
“Our strategic retreat paid off,” Nvidia founder and CEO Jensen Huang told the 10,000 members of the National Taiwan University graduating class at school’s commencement last week. “By leaving the phone market, we opened our minds to invent a new one.”
Greg Kahn
Emerging Tech Exchange
Founder & CEO
