NVIDIA Chief Executive Officer Jensen Huang said on Wednesday that the company’s dominance in artificial intelligence chips comes from a bet made more than a decade ago that centered on billions of dollars in AI investments and a team of thousands of engineers.
Hwang’s comments came during a question-and-answer session at Nvidia’s annual shareholder meeting after its shares surged more than 200% in the past year and Wall Street has been fascinated by the company’s dominant position in the AI chip market.
Nvidia recently split its stock 10-for-1, giving it a valuation of more than $3 trillion, briefly making it the most valuable public company.
The first question Huang answered Wednesday was about the company’s competition as traditional chipmakers and startups alike release products aimed at challenging Nvidia, which has more than 80% market share in AI chips.
Nvidia shares fell more than 1% in trading on Wednesday.
While he didn’t name any competitors, Huang outlined the company’s overall strategy to stay relevant, saying he believes Nvidia has already “pivoted” from its previous gaming focus to a data center focus. The company is also looking to create new markets for AI, such as industrial robotics, and to do so it aims to partner with every computer maker and cloud provider.
Huang said the company’s AI chips have the “lowest total cost of ownership,” suggesting that while other chips may be cheaper, Nvidia’s chips are more economical when considering performance and operational costs.
Ultimately, Huang said, Nvidia achieved a “virtuous cycle” — a tech-industry term for when a platform reaches its maximum number of users, allowing it to make the improvements needed to attract even more.
“The NVIDIA platform is broadly available across all major cloud providers and computer manufacturers, building a large and attractive installed base for developers and customers. This makes our platform even more valuable to our customers,” Huang said.
Pleased with the company’s performance, Nvidia shareholders approved a nonbinding vote on executive compensation called “Say on Pay.” Nvidia executives are compensated through a combination of salary and various types of restricted stock units.
According to the company’s annual report, Hwang received a compensation package worth about $34 million during the company’s fiscal 2024, a 60% increase from 2023 onwards.