To a hammer, everything looks like a nail. To a maker of chips that power artificial intelligence, everything looks like a “token”. That is the industry lingo for the units of information an AI model takes in and spits out. Nvidia’s founder Jensen Huang believes the world is on the cusp of a token explosion. His company’s $3.3tn market capitalisation depends on it.
Nvidia reported $44bn of revenue in the three months that ended in April, 69 per cent higher than a year earlier, and more than analysts had expected, according to LSEG. The company remains the biggest beneficiary of the AI boom, with scant competition when it comes to state-of-the-art chips — reflected in a 71 per cent gross margin.
That is not without hiccups. Nvidia took a $4.5bn writedown as a result of export curbs that have frozen it out of China, a market the company thinks could have represented $50bn of annual revenue. Nvidia had already been forced by the White House to sell only a lesser version of its AI chips to the People’s Republic. The writedown would have been bigger had Nvidia not managed to re-use unsold parts elsewhere.