The popularity of generative artificial intelligence (AI) applications supercharged Nvidia (NASDAQ: NVDA) stock this year because investors and analysts expect the company's graphics processing units (GPUs) to play a major role in the proliferation of this space.

That's not surprising given Microsoft-backed (NASDAQ: MSFT) OpenAI's immensely popular chatbot ChatGPT reportedly employs 20,000 Nvidia data center GPUs for processing data, according to market research firm TrendForce. The firm adds that the booming usage of ChatGPT could create the need for more Nvidia GPUs, with OpenAI expected to deploy at least 30,000 graphics cards from the semiconductor giant. In fact, Microsoft recently pointed out that it has used "thousands of NVIDIA AI-optimized GPUs" to enable OpenAI to train AI models.

TrendForce utilizes the pricing of Nvidia's A100 GPUs for reference (they cost between $10,000 and $15,000) and estimates that ChatGPT alone could generate $300 million in revenue for the company. That's a conservative guess, as according to another appraisal by Citigroup, the growing usage of ChatGPT could increase Nvidia's annual revenue by $3 billion to $11 billion, suggesting that this market could substantially move the needle for the company given that it generated $27 billion in revenue last fiscal year.

Continue reading

Source Fool.com