JEREMY SAMPSON: Irrepressible Nvidia

Last week saw what was billed as the most eagerly anticipated earnings report for years of a listed Wall Street company — Nvidia. One US investment pundit went so far as to say the chipmaker was the only game in town. But how can that be?

Let’s take a step back. Technology stocks are the darlings of the investment world right now. “Tech” has become one of those terms bandied about with great gusto — but what exactly is it?

In the recently published study of tech companies by global consultancy Brand Finance, the top 10 brands by value are Apple, Microsoft, Google, Amazon, TikTok, Samsung, Facebook, Instagram, Oracle and Nvidia. The term “technology” indicates something evolving all the time; as Britannica puts it: “The application of scientific knowledge to the practical aims of human life, or as it is sometimes phrased, to the change and manipulation of the human environment.”

Add to that the magical world of AI. 

The first company to top a market cap of $3-trillion was Apple, founded in 1976 by Steve Wozniak, Ronald Wayne and Steve Jobs. I have to admit a long-standing bias for the brand. It was 1985 and I was representing South Africa at the congress and general assembly of the World Design Organisation (then known as the International Council of Societies of Industrial Design) in Washington, DC. There was an expo of some of the top brands in the world at that time.

On a simple table, shorter than you would find in many South African boardrooms, Apple had a display involving print, product and packaging in total visual harmony. The simplicity was breathtaking and Apple has maintained those values to this day, as a visit to any iStore anywhere in the world will demonstrate.

Returning to South Africa, my first act was to order the first of many Apple Macs. Only the other day another effort was made to switch me to a Windows PC and end my long-running affair. Over the years many pundits have called time on Apple’s long run of successes — while shareholders have continued to be handsomely rewarded. 

In June the Financial Times trumpeted Nvidia’s  supremacy as it briefly became the most valuable company in the world based on market cap.

Richard Haigh, MD of Brand Finance, says Nvidia’s “relentless innovation in AI hardware” has propelled its brand value to new heights, while Microsoft has reinforced its position as a cornerstone of modern business technology. “Together these brands exemplify the profound impact that cutting-edge AI capabilities have on elevating brand value and shaping the future of global industry.”

Nvidia was co-founded in 1993 by CEO Jensen Huang, who remains the main driving force. The initial vision was to bring 3D graphics to the gaming and multimedia markets. However, as the FT noted, today Nvidia is more than just a chip company — it provides all the components to build “an entire supercomputer”, heralding the emergence of a new AI economy.

Huang, 61, has something to say about his lifestyle: “I work from the moment I wake up to the moment when I go to bed, and I work seven days a week. When I’m not working, I’m thinking about working. And when I’m working, I’m working.”

It is fascinating to review the brand value of companies relative to their market capitalisation: Apple $516.6bn/$3.52-trillion, Microsoft $340.4bn/$3.13-trillion, Google (Alphabet) $333.4bn/$2.04-trillion and Nvidia $44.5bn/$2.98-trillion.

Some in the US are predicting that one or more of these companies could clear the market cap bar of $4-trillion within the next 12 months. (Don’t talk to me about NAV, as tech start-ups are changing hands for many millions of dollars — often in an effort to buy the best talent at that moment.) Given that Nvidia’s brand value has rocketed 163% in the past year, could it pip Apple and Microsoft? While the markets are volatile, The Finance Ghost noted in the FM last month that Nvidia’s shares were up 121% on the year and Microsoft’s a mere 10%. 

Google co-founder Larry Page once said: “Lots of companies don’t succeed over time. What do they fundamentally do wrong? They mostly miss the future.” Wise words that apply to all companies, highlighting the need to stay relevant to the challenges and opportunities of today and tomorrow. Nvidia and Microsoft are leading the charge right now, but would you bet against Apple, Google or Amazon? And then there is always Elon Musk and others.

Investment advisers, managers, journalists and others are not shy to share their thoughts on who the winners will be in these tech wars. But some of them have no real idea, and over the years I have often wondered about their credentials. As Clint Eastwood once stated: “Opinions are like assholes. Everyone has one.”

* Sampson is chair of Brand Finance Africa