Chip titan Nvidia reports soaring profits but an AI crash could send it back to Earth

It's boom time for AI, says firm's founder Jensen Huang, but some fear a dotcom-type blowout is on the way.

- By James Ball

Twenty years ago, Nvidia was a company making specialised graphic cards to improve the visuals of video games, with a total valuation of around £6bn.

Within about a decade, Nvidia's microchips had become the backbone of the boom in cryptocurrency mining and data centre industries, which helped push its market value to more than £200bn.

Today, Nvidia is the most valuable publicly traded company in the world, with a market cap of more than £3.2tn - a more than tenfold increase in just five years. The reason for this is that Nvidia's chips are the foundation of the AI boom, being almost the only hardware option for AI companies that are not big enough to manufacture their own chips.

Nvidia's chips are widely used in the training of top-end AI models and in the data centres being built around the world for their widespread deployment. As a result, demand for its chips is soaring.

In its results announcement this week, the company revealed sales in the past three months of $46.7bn (£34.5bn), up 56% in just a year. It is also immensely profitable: Nvidia's gross margins are in excess of 70%, and its net profits for the quarter totalled $26.4bn (£19.5bn).