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Nvidia nears elite trillion-dollar market cap club of Apple, Microsoft, Alphabet and Amazon

Amazing. Is Jensen Huang lucky or a genius? Nvidia is perfectly positioned for future AI. He has been one of my top ten semiconductor CEOs since I started the list.
 
Market capitalization for semiconductor companies (exclude memory) as of May 25, 2023:

Nvidia: $939.07B
TSMC: $502.45B
Broadcom: $304.82B
AMD: $193.11B
Texas Instruments: $154.63B
Qualcomm: $115.65B
Intel: $114.62B
Analog Devices: $87.58B
Infineon: $47.15B
NXP: $44.50B
Marvell: $42.44B
Microchip Technology: $40.68B
 
Among the world top 10 market cap companies, only #3 Saudi Aramco and #7 Berkshire Hathaway do not use TSMC foundry services, as of May 25, 2023.


#1 Apple
#2 Microsoft
#3 Saudi Aramco
#4 Alphabet (Google)
#5 Amazon
#6 Nvidia
#7 Berkshire Hathaway
#8 Meta/Facebook
#9 Tesla
#10 TSMC
 
Among the world top 10 market cap companies, only #3 Saudi Aramco and #7 Berkshire Hathaway do not use TSMC foundry services, as of May 25, 2023.


#1 Apple
#2 Microsoft
#3 Saudi Aramco
#4 Alphabet (Google)
#5 Amazon
#6 Nvidia
#7 Berkshire Hathaway
#8 Meta/Facebook
#9 Tesla
#10 TSMC
I mean TSMC isn't really the reason for any of these companies are as huge as they are. Apple became the company they were back when they were all Samsung for mobile and all intel for PC. TSMC just enabled Apple to take things to that next level. Microsoft's bones were built on PC and now is being propelled by cloud (which until just recently was 95% powered by intel). Alphabet got here from buying the right companies to dominate the collection and sale of information for both the internet and mobile markets. Amazon is THE online retailer that started using it's scale to become the largest CSP. Tesla is an auto firm. Meta is a data mining firm. In short all of these firms besides NVIDIA and Apple; semiconductors have as little direct relevance to their business as it does for say Boeing or 3M.

In spite of that I think TSMC's background relevance in making almost everything in this modern world has more than earned them a place on the top 10 even if their work is traditionally viewed as "low on the value chain". In my biased opinion they really ought to be much higher than Meta and Tesla. Additionally, because I think eventually opensource software will crack the NVIDIA walled garden, I think there is even an argument that TSMC should be valued even higher than NVIDIA.
 
I mean TSMC isn't really the reason for any of these companies are as huge as they are. Apple became the company they were back when they were all Samsung for mobile and all intel for PC. TSMC just enabled Apple to take things to that next level. Microsoft's bones were built on PC and now is being propelled by cloud (which until just recently was 95% powered by intel). Alphabet got here from buying the right companies to dominate the collection and sale of information for both the internet and mobile markets. Amazon is THE online retailer that started using it's scale to become the largest CSP. Tesla is an auto firm. Meta is a data mining firm. In short all of these firms besides NVIDIA and Apple; semiconductors have as little direct relevance to their business as it does for say Boeing or 3M.

In spite of that I think TSMC's background relevance in making almost everything in this modern world has more than earned them a place on the top 10 even if their work is traditionally viewed as "low on the value chain". In my biased opinion they really ought to be much higher than Meta and Tesla. Additionally, because I think eventually opensource software will crack the NVIDIA walled garden, I think there is even an argument that TSMC should be valued even higher than NVIDIA.

Yes, each of the top companies in the list has its own unique strength and successful story that has nothing to do with TSMC. What interesting about it is that many of them are competitors to others but they all can collaborate with TSMC.

In a way TSMC knows a lot about these companies' secret products or projects but they all have the confidence to work with TSMC. Isn't that wonderful?
 
I think there is even an argument that TSMC should be valued even higher than NVIDIA.
TSMC has three inherent challenges that will prevent it from achieving a high forward PE ratio. (As of today, Nvidia's forward PE is just under 83.)

1. Geopolitical risk. Obviously this has been discussed relentlessly here.
2. Very high CAPEX necessary for maintaining leadership. Very few high CAPEX companies have high PE ratios. Tesla is not a high CAPEX company compared to TSMC. (TSMC's is 4x Tesla's.)
3. The perception that chip fabricators bet the company on every process generation. I think reality is more complicated than this, but financial market "experts" (it hurt to type that word a little) think that's the case. As far as the they're concerned (as judged by their articles), the timeline is littered with has-been leaders in chip manufacturing.
 
“The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” said Jensen Huang, founder and CEO of NVIDIA.

“A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.

“Our entire data center family of products — H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU — is in production. We are significantly increasing our supply to meet surging demand for them,” he said.
 
One big advantage Nvidia has over Intel is that there is evidence they know how to make acquisitions successful, and Intel mostly doesn't. I say "mostly" because Altera is still an active FPGA product line in Intel, but Xilinx/AMD is still #1. I had hoped that by 2022 Intel would have made Altera more successful. (Perhaps Dan has the latest numbers). Nvidia has really capitalized on and supported Mellanox, keeping it #1 in networking silicon, and Bluefield IMO is the best DPU by far. Intel has acquired many, many companies over the years, and Altera is the only one that comes to mind that they haven't terminated. Barefoot Networks was Intel's last chip casualty.
 
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Here are the top 12 insights from Jensen's speech at NTU Taiwan:

1. We are at the beginning of a major technological era: "Like PC, internet, mobile and cloud, but AI is far more fundamental."

2. AI will create new jobs that didn't exist before: "Like prompt engineering, AI Factory ops, and AI safety engineers."

3. AI will change every job: "Supercharging the performance of programmers, designers, artists, marketers, and manufacturing planners."

4. You must learn to take advantage of AI: "While some worry AI may take their jobs, someone who is expert with AI will."

5. Overall, AI software has opened multi-trillion dollar opportunities: "The world was simpler when I graduated college."

6. Nvidia's purpose: "To help the Einstein and DaVinci's of our time do their life's work."

7. Nvidia almost died in its first years: Jensen had to call the CEO of Sega and say "that they had to find another partner but I needed Sega to pay us in whole or Nvidia would be out of business."

8. Humility abut his weakness led to his success: Flying to Taiwan and working with Morris Chang on production (where Nvidia was weak) enabled their position today 25 years later.

9. Nvidia had to endure years of $1B market cap: Because they were investing in CUDA that created the base for the applications on top of GPUs like blockchain and AI.

10. Alexnet, trained on GPUs of Nvidia, in 2012 started the big bang of AI: Nvidia risked everything by doubling down on it and deep learning.

11. Sacrificing the profitable mobile market setup the AI opportunity: Nvidia had to leave a profitable business to focus on AI and robotics.

12. We are the starting line of AI: "Every industry will be revolutionized...Run after it."
 
Here are the top 12 insights from Jensen's speech at NTU Taiwan:

1. We are at the beginning of a major technological era: "Like PC, internet, mobile and cloud, but AI is far more fundamental."

2. AI will create new jobs that didn't exist before: "Like prompt engineering, AI Factory ops, and AI safety engineers."

3. AI will change every job: "Supercharging the performance of programmers, designers, artists, marketers, and manufacturing planners."

4. You must learn to take advantage of AI: "While some worry AI may take their jobs, someone who is expert with AI will."

5. Overall, AI software has opened multi-trillion dollar opportunities: "The world was simpler when I graduated college."

6. Nvidia's purpose: "To help the Einstein and DaVinci's of our time do their life's work."

7. Nvidia almost died in its first years: Jensen had to call the CEO of Sega and say "that they had to find another partner but I needed Sega to pay us in whole or Nvidia would be out of business."

8. Humility abut his weakness led to his success: Flying to Taiwan and working with Morris Chang on production (where Nvidia was weak) enabled their position today 25 years later.

9. Nvidia had to endure years of $1B market cap: Because they were investing in CUDA that created the base for the applications on top of GPUs like blockchain and AI.

10. Alexnet, trained on GPUs of Nvidia, in 2012 started the big bang of AI: Nvidia risked everything by doubling down on it and deep learning.

11. Sacrificing the profitable mobile market setup the AI opportunity: Nvidia had to leave a profitable business to focus on AI and robotics.

12. We are the starting line of AI: "Every industry will be revolutionized...Run after it."

For those who want to watch the Huang's whole speech:

 
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