Nvidia: Rise and Fall and Rise Again 📈

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Have you been following the stock market lately? There's been quite a shake-up at the top, with Nvidia briefly becoming the world's most valuable company. Let me break down Nvidia's journey and what it means for the legal sector...

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Nvidia’s Market Trajectory 🔥

Nvidia, the manufacturer behind the chips that power ChatGPT, has experienced an unprecedented rise in stock prices over the last few months. It surpassed Microsoft and Apple on June 18 to become the world’s most valuable company with a market capitalisation of $3.34 trillion. However, by the end of the week, Nvidia dropped back to third place as its market value decreased to $2.91 trillion. Nvidia CEO Jensen Huang’s sale of $95 million in shares contributed to this decline.

While some analysts draw parallels to Cisco's dot-com boom, others expect fluctuations for a new market leader. Nvidia's stock is still up 161% since January, so we can anticipate an exciting race between Nvidia, Apple, and Microsoft towards a $4 trillion valuation.

Who is Nvidia: The Tech Giant’s Rise Through the Ranks 🤷‍♀️

Nvidia Corporation is a technology company founded in April 1993. Its manufacturing expertise centres in particular on the design and supply of graphics processing units (GPUs) and artificial intelligence (AI) chips. Its technology has applications in various fields, including cloud gaming, engineering, and entertainment.

In 2022, Nvidia gained popularity for its role in the launch of ChatGPT, a generative AI chatbot, the hardware of which was made up of around 10,000 Nvidia GPUs. This led to a surge in demand for chips used to power AI systems as more and more companies rushed to capitalise on the growing popularity of artificial intelligence. Nvidia’s chips are also known for enabling computer programmes and video games to process a myriad of information at lightning speeds and deliver a high-quality user experience.

In 1999, Nvidia became a publicly listed company. Shares were priced at $12 each and are now worth over ten times that amount. In the 2010s, Nvidia’s growth strategy was centred on acquisitions of other enterprises such as Icera and 3Dfx Interactive, but such practices eventually came under the scrutiny of antitrust authorities in the United States and beyond. A notable attempt was the $40 billion bid for Arm Ltd in 2020, which was abandoned in 2022 due to regulatory concerns about market dominance. Arm Ltd received $1.25 billion in compensation.

What Does Nvidia’s Popularity Mean for the Legal Sector? ⚖️

Nvidia plays a central role in the development of AI technology. Its rapid rise as the world’s most valuable company reflects the increasing demand for AI systems across various industries. The legal industry is no stranger to incorporating AI into its toolkit as a way of delivering better and more efficient services for its clients. Luminance, a Large Language Model (LLM), has gained popularity in the industry for its ability to analyse and assist in the negotiation of contracts. A report by Goldman Sachs found that around half of the tasks usually undertaken by legal professionals can now confidently be replaced by AI systems doing the work instead.

However, the AI technology that Nvidia has played a big role in developing and commercialising has increasingly come under scrutiny from regulators across the globe. American antitrust regulators have warned that the AI sector must be monitored closely to prevent the development of monopolies amongst already dominant firms such as Nvidia. This means more law firms and in-house lawyers will be trying to reassure regulators that their clients or companies they work for are not engaging in anti-competitive behaviour.  

Concerns about client confidentiality and the potential for AI systems to “hallucinate” and provide factually incorrect outputs would prompt law firms looking to incorporate AI into everyday practice to increase their R&D spending to ensure that the AI system they develop is optimised and safe. This could mean casting their net wider to source the most appropriate AI hardware, which would ensure the safety of their clients. However, while market dominance is not always an accurate indicator of quality, many other sectors, including the automotive and data centre industries, place their trust in Nvidia’s products. It might be time for the legal industry to become another one of Nvidia’s target clients.