Jensen Huang, CEO of NVIDIA, delivers a keynote speech at the world's largest information technology and consumer electronics show, CES 2025, held in Las Vegas, Nevada, on Jan. 6. /Courtesy of AFP

"It will take 20 years for a usable quantum computer to emerge."

The quantum computing stocks, which were thriving and referred to as 'cash cows,' sharply fell on the New York Stock Exchange the next day, Jan. 8.

On Jan. 8, quantum computing dropped 43%, Rigetti Computing dropped 45%, and IonQ dropped 39% on the New York market. Even prices of related corporations listed on the Chinese stock market, such as Quantum SysTech and Accelink, plummeted. This exemplifies the significant influence of NVIDIA, an absolute leader in artificial intelligence (AI) semiconductors, and its head, Jensen Huang. NVIDIA dominates more than 80% of the global AI chip market based on its AI development platform, "CUDA," which only runs on its products.

The beginning of NVIDIA occurred in 1993 when Jensen Huang, along with Curtis Priem from IBM and Chris Malachowski from Hewlett-Packard (HP), gathered at a U.S. chain restaurant called "Denny's" in San Jose, California. The San Jose Denny's was where Jensen Huang worked as a dishwasher at the age of 15. They sat at a corner table of the 24-hour restaurant, refilling their coffee ten times, brainstorming the chip business that would enable realistic 3D graphics in PCs.

Born in Tainan, Taiwan, in 1963, Jensen Huang moved to the United States at the age of 9 and studied electrical engineering at Oregon State University and Stanford University Graduate School. He became involved in microprocessor design at semiconductor corporations LSI Logic and AMD before founding NVIDIA.

Now, 32 years later, NVIDIA stands as the second-largest corporation in the world by market capitalization (market cap), following Apple. NVIDIA's stock soared by 171% throughout 2024 alone. As of the market close on Jan. 14, NVIDIA's market cap reached $3.23 trillion (approximately 4,758,759 billion won). On the same day, Apple's market cap was $3.51 trillion. When NVIDIA listed on the Nasdaq on Jan. 22, 1999, its stock price was $12. As of the market close on Jan. 14, the stock price was $131.76 per share. Considering that the initial one share has split four times, increasing to 240 shares, it is estimated that if an investor had continued to hold one share purchased shortly after the initial public offering, its value would now be $31,622.40 (approximately 46.6 million won). This indicates a rise of over 2,600 times in value over 26 years. Thanks to the soaring stock price, Jensen Huang has become one of the top 10 richest people in the world. As of Jan. 14, Forbes estimates his net worth at $115.1 billion (approximately 169,576.8 billion won).

There is no doubt that the rapid rise of Generative AI, including ChatGPT, is the primary driving force behind NVIDIA's explosive growth. Jensen Huang himself noted during a 2019 appearance on CBS, "There was no magic. I just worked hard every single day for 60 years." Opportunities must be seized when they arise, and those who prepare diligently are most likely to encounter opportunities. However, that cannot be the entire story. This analysis covers how NVIDIA, as the absolute leader in the AI chip market, has achieved its monumental success over the past 32 years.

Key to success 1│

Vision to read technological trends, and tenacity

No one can accurately predict the future. However, it is possible to gauge trends and directions. Even Jensen Huang did not foresee the 'arrival of the AI era' as it exists today. In a 2023 NBC interview, when asked whether he foresaw the success of AI, he replied, "I only expected that the acceleration of computing speed improvement would occur." Jensen Huang and his colleagues were convinced that an era would come where processing large amounts of data would be crucial, and they steadily enhanced the performance of graphics processing units (GPUs) and persisted in their business endeavours. Tenacity strengthens in proportion to the depth of conviction. The AI development platform, CUDA, developed with substantial investment, had limited utility when it was launched in 2006. Despite falling stock prices and intense pressure from shareholders, Jensen Huang steadfastly held on. Brian Catanzaro, vice president of NVIDIA's AI deep learning research division, recalled in a 2023 CNBC interview that, when he joined NVIDIA in 2008, "Wall Street investors questioned why so much money was being poured into things that no one was using (such as CUDA and other AI-related technologies)." The 2017 cryptocurrency craze and the use of GPUs in mining began to draw the market's attention to NVIDIA. The surge in Generative AI that hit in 2022 gave wings to NVIDIA's growth.

Key to success 2│

Overwhelming CUDA ecosystem 'lock-in effect'

"When hiring talents related to AI semiconductors, everyone requests to use 'NVIDIA GPUs' and CUDA."

Jung-ho Park, former vice chairman of SK hynix, mentioned at the academic symposium commemorating the opening of the Hallim University Doheon Academic Institute on Feb. 15, 2023, that CUDA is the result of Jensen Huang's long-held conviction regarding the acceleration of computing speed, evolved over time through market feedback. A substantial volume of 'code' has built up as many AI developers have used CUDA for programming for over a decade, serving as a 'reference' for others. Moreover, programs made with CUDA exclusively run on NVIDIA's GPUs. The 'CUDA ecosystem' is so robust that AI semiconductors have no choice but to use NVIDIA GPUs. This is known as the 'lock-in effect.' The lock-in effect refers to the phenomenon where customers do not switch to other products or services after using a product or service. In platform services, the lock-in effect is one of the 'key points' that determines the success or failure of a service.

Key to success 3│

Task-oriented culture and wide communication

Is there a phrase more appealing to employees than 'people-oriented corporate culture'? However, for a leader managing a massive organization like NVIDIA with nearly 30,000 employees, this approach can be burdensome. Rather than remembering employee names and celebrating their birthdays, it may be more effective to meticulously oversee the key steps from planning to performance. This is why NVIDIA aims for a task-oriented corporate culture. Instead, Jensen Huang communicates broadly with employees through work. It is noteworthy that NVIDIA, as a cutting-edge tech company, widely uses email for work communication. All employees at NVIDIA send their "Top 5 Emails" to their direct teams and executives once every one to two weeks. These emails must contain 'five important work-related matters' and 'recent market trends.' Jensen Huang is included among the recipients. Sometimes Huang responds just minutes after an email is sent. More than 60 direct reports regularly meet with the CEO, which is often fewer than 10 in typical large American corporations.

Key to success 4│

Substantial and swift compensation

Overtime and weekend work are common at NVIDIA. Not only engineers but also marketers often work over 60 hours a week. As the corporate culture gravitates toward a work-centered approach, praise is sparingly offered. Nevertheless, NVIDIA's turnover rate is exceptionally low, below 3%. This is due to the commensurate rewards for work and achievement. Rapid compensation based on thorough performance evaluation is executed at NVIDIA. Employees receiving an 'excellent' grade or selected as 'special contributors' in annual performance assessments can receive hundreds of shares of stock. There are also instances where Jensen Huang contacts an employee right away to give them stock for an outstanding performance. The fast rise in NVIDIA's stock price has made stock grants a powerful incentive for retaining talent.