This was published by the Irish Times on December 28th last. It was interesting to find the Irish links back to the Californian gold rush of the 1850s..
In a frothy market, the shrewd opportunist will sell soap and wands to blow bubbles. Turkish flower exporters capitalised on the 17th-century Dutch tulipmania; Lehman Brothers and other banks created “collateralised debt obligations” to fuel the housing boom in the mid-2000s, while simultaneously Cisco drove computer networking equipment to accelerate the internet bubble before the dotcom crash.
Then there was the first Californian millionaire Sam Brannan, whose Waterford-born father Thomas had emigrated to Portland Maine in 1775. Learning of the discovery of gold at Sutters Mill in 1848, Sam Brannan bought up as much prospecting equipment as he could find.
Then, opening the only specialist store for gold diggers, he reportedly catalysed the Californian gold rush by striding the San Francisco streets shouting “gold, gold, gold from the American river!”
Today, US chip maker Nvidia is successfully leveraging a market frenzy.
A mere 15 months ago, Nvidia appeared to be in deep trouble when it wrote off a large product inventory as the computer gaming market on PCs stalled after its boom during the Covid pandemic.
At the same time, Nvidia’s sales into the cryptocurrency sector weakened as that sector underwent a technology transition and a market collapse. By October 2022, Nvidia’s stock price had declined 40 per cent compared to the previous year.
Earlier that February, Nvidia had abandoned its attempt to acquire UK-based ARM, a semiconductor design company particularly dominant in the mobile phone sector. Nvidia had offered €36 billion in 2020, but the proposed transaction faced severe regulatory objections in the EU, UK, USA and China over both anti-trust and national security concerns.
Nvidia had also expanded its headquarters in Santa Clara (California) in early 2022, with the futuristic “Voyager” building named after a Star Trek starship.
A smaller and equally avant-garde building, “Endeavor”, opened in 2017 for a cool €340 million. In light of the autumn 2022 stock price decline, some investors were querying the prudence of such lavish real estate plays.
However today the stock price is over 300 per cent since autumn just a year ago. Its core products underpin this year’s explosive growth of investment in generative artificial intelligence (GenAI). A shortfall in the supply to the major cloud vendors, enterprise sector and start-ups focusing on GenAI has resulted in a market squeeze and premium pricing.
What does Nvidia make? Its core products are “graphic processing units” (GPUs), which were originally specialised particularly for computer gaming. GPUs simultaneously process substantial volumes of data concurrently in multiple streams and are particularly efficient at creating gaming images, mining cryptocurrency and training GenAI models.
Last week there were reports that at a company all-hands staff meeting, some newer employees complained that some old timers had become complacent and work-shy.
Those fortunate enough to have been granted stock options just a few years ago are now sitting on substantial personal fortunes as the stock price has climbed and their options vest. Chief executive and co-founder Jensen Huang apparently responded that working at Nvidia is voluntary, and individual staff members should act as chief executives of their own time and commitment.
Mainland China has been a key market for Nvidia but the Biden administration’s export restrictions to China are curtailing advanced semiconductor technologies for supercomputers. Nvidia has had to withdraw products which were intended to comply with the US’s China policy.
Huang is expanding opportunities elsewhere. The Indian market may emerge to become as significant to Nvidia as China. Despite investor scepticism at the massive investments made by Facebook in the metaverse, Huang nevertheless sees the long-term opportunity for Nvidia in the “omniverse”.
This would combine Nvida’s core strength of real-time image processing for gaming with GenAI capabilities, thus allowing consumers to instantly create, explore and play in their own shared-experience virtual worlds.
Nvidia is one major multinational which is not yet an IDA client and it has no presence in the Republic. However, there is nevertheless Irish heritage. Martin Murphy had emigrated from Wexford to Canada in 1820 and, subsequently, his family were in the first wagon train to successfully cross the Sierra Nevada into California.
His two sons, Dan and John, opened a general store during the California gold rush and competed with Sam Brannan. They built a thriving business, in part sourcing beef and supplies from a Santa Clara ranch owned by a third son, Martin jnr. That ranch grew to be substantial on the back of the gold rush and now the two gorgeous Nvidia headquarter buildings are built on his former land.
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