Nvidia (NASDAQ: NVDA) has seen its shares rise over 870% since the end of 2022, adding over $3 trillion to its market cap due to its dominant role in artificial intelligence (AI), particularly in data centers. PwC estimates that AI could contribute $15.7 trillion to the global economy by 2030.
The company’s GPU hardware, especially the Hopper and upcoming Blackwell models, has driven significant demand, enabling Nvidia to charge prices exceeding $40,000 per chip. However, CEO Jensen Huang’s strategy of rapid innovation and annual new chip releases could lead to increased depreciation of existing hardware, impacting sales as customers might delay upgrades to avoid falling behind on costs.
While Nvidia’s GAAP gross margin soared to 78.4% last year, the introduction of new models may push customers towards cheaper alternatives, challenging Nvidia’s pricing power and overall market position.
