Every billionaire has his own path to success. For example, technology tycoon Jensen Huang, whose fortune has skyrocketed over the past year, has been systematically realizing his professional abilities.
Huang’s chip and graphics processor company Nvidia has been riding the wave of AI success and its stock was the top stock of the week, rising 24.4% on Wednesday, May 24, after a market-shaking financial report.
Finam.ru describes how the emigrant Huang created the successful technology company Nvidia in the U.S., changed the graphics processor market and is still struggling with obstacles to business development.
Emigration to the U.S. and first career steps
Jensen Huang was born in Taiwan in 1960. He moved with his family to Thailand when he was six, but at the time the Vietnam War, which was practically next door, caused turmoil there, so they emigrated to the United States. Huang, who was nine years old when he arrived in the States, later recalled that it was not easy for him to fit in with his American peers. After high school, however, he graduated first from Oregon State University with a bachelor’s degree in electrical engineering and then a master’s degree from Stanford University in the same field.
In 1984, Huang’s first job was microprocessor design and development at Advanced Micro Devices (AMD), which he did for a year. In 1985 the future billionaire moved to LSI Logic, a semiconductor and software development company to improve speed in mobile networks, data centers and professional computing. Two years earlier, in 1983, LSI Logic had set a record with the largest IPO in history at the time, worth $153 million. Huang worked there until 1993, holding various positions in engineering, marketing and even the company’s general management team. He left the same year that Sony chose LSI to install the PlayStation processor.
Nvidia and the secret of its success
Jensen Huang co-founded Nvidia in 1993 with former Sun Microsytems engineers Chris Malachowski and Curtis Prem with a start-up capital of $40,000. All three believed that the next trend would be accelerated graphics-centric computing. They reached this conclusion because of the growing success of consoles. In their view, gaming consoles represented the most advanced and sophisticated computers on the market. In 1999 the company introduced the GeForce 256, a graphics processor that changed the market. Capable of handling 3D graphics at high speeds, the GeForce 256 was by far the most powerful graphics processor the world had ever seen. Nvidia ended up contracting with Microsoft to develop graphics hardware for the Xbox.
Nvidia went public in 1999 and its stock was worth $19.69. As of May 24, 2023, Nvidia stock is now worth $300. Huang owns 3.6 percent of the company’s securities and has been its CEO for more than 30 years. Over the years, Nvidia has become a dominant force in computer gaming chips and develops chips for data centers and cars. Its technology is used in a variety of applications, and the field is growing every year.
The insatiable demand for investment in artificial intelligence has made Nvidia stock the most profitable in the S&P500 this year. According to the Bloomberg Billionaires Index, Huang’s fortune rose 98% in 2023, making him the most profitable among U.S. and global tech billionaires.
Almost all of Huang’s fortune is concentrated in Nvidia stock and options, whose value rose on expectations that the company would take off on the wave of OpenAI ChatGPT and other advances in artificial intelligence. Compared to last year, when Huang’s fortune fell by nearly half amid a collapse in tech stocks, the reversal has been sharp.
Investors are attracted to Nvidia because it’s seen as a key vendor that will meet AI’s need for computing power, and billionaires from Stanley Druckenmiller to David Tepper have ramped up their holdings in Q1 2023.
Nvidia stock, up 24.4% over the day this week, was very close to setting a record for the largest single-day gain in the U.S. company’s market capitalization in history. The company is now valued at $939 billion and, according to analysts, could become the fifth public U.S. company worth more than $1 trillion and the first chip maker to reach that milestone.
In a report released May 24, Nvidia projected revenue of $11 billion this quarter, far exceeding experts’ expectations of $7.2 billion. As Morning Brew writes, citing Huang, the company’s potential is much greater, because as AI is integrated, outdated $1 trillion data center technology will have to be replaced with new chips.
MarketWatch cites Nvidia stock valuations from Western analysts. For example, Stacy Rasgon of Bernstein raised her target price on the company’s stock from $300 to $475. Barclays analyst Blaine Curtis raised their target price from $275 to $500. Harlan Suhr of JPMorgan doubled his target price on Nvidia to $500 as well.
Confrontation between the U.S. and China strikes a blow to Nvidia
However, not everything is so smooth. In September 2022, the U.S. government banned Nvidia from selling high-tech products to China, after which the company’s sales in the Middle Kingdom collapsed by 20% last year. Huang, a native of Taiwan, finds himself in a difficult situation because he can no longer expect to develop business in China. As Bloomberg notes, Nvidia’s two largest markets during the pandemic were China and Taiwan, which accounted for more than half of the company’s revenue in 2022. A U.S. government ban on Nvidia selling certain advanced chips to China could cost the company $400 million per quarter, according to experts.
Huang expressed hope that the U.S. and China could one day ease tensions, calling the relationship between the two countries “good for the world.”
Meanwhile, demand for Nvidia’s chips is so high that there is a “fight” between technology firms for access, said Chris Miller, author of Chip War: The Fight for the World’s Most Critical Technology. “In the long run, restrictions for China will be a bigger problem, but this year’s AI boom will more than make up for it,” Miller commented.