Nvidia: at the Center of A.I.'s iPhone Moment

Two-year price chart of NVDA

Over ten years ago an engineering friend recommended Nvidia stock (he wasn't an insider, just a contract programmer who was impressed by the company when he worked for them between jobs). I passed.

At the time NVDA seemed to be over-priced; it made the fastest gaming boards, but it had a very high price-earnings ratio. It dominated the gaming market, but it was a niche business. Its upside was capped.

In 2011 Bitcoin began to seep into the public consciousness. Over the next decade Bitcoin and other crypto-currencies went through boom-and-bust cycles, but always with higher highs. Crypto-currency coins could be created through an increasingly costly process called "mining", and the race went to those who used fast Nvidia cards. The price of Nvidia stock reached an all-time high in November, 2021, the same month that Bitcoin reached its high of $67,567 (chart above).

In 2022 crypto prices crashed for a variety of reasons, which included a trading ban in China, the bankruptcy of crypto funds and exchanges, and U.S. interest rate hikes that had a highly negative effect on speculative assets. From peak to trough in the ensuing twelve months Nvidia stock lost more than half its value.

Ignoring the Wall Street adage, "never try to catch a falling knife," your humble blogger-speculator was driven by the fear of missing out and made a small investment in NVDA at $211 and later at $142. Then the artificial intelligence "chatbot" known as ChatGPT was released to the general public on November 30, 2022, and the stocks of companies that had been involved in artificial intelligence took off. Nvidia makes the chips that everyone in A.I. must use, and its stock rocketed past its previous all-time high today. A year ago I had been regretting my purchase. Now I wish I had bought more.

Jensen Huang, the CEO of Nvidia, said "This is the iPhone moment of artificial intelligence." Millions of consumers, investors, and producers agree with him.