(Bloomberg) — Nvidia Corp. shares fell Tuesday after a wide-ranging product presentation by CEO Jensen Huang failed to propel the artificial intelligence chip maker to new heights.
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The stock fell 6.2% to $140.14 in New York, marking the biggest single-day drop in four months. Although Nvidia’s recent announcements have given an optimistic view of the company’s long-term prospects, there has not been as much near-term upside as some investors sought. “Nvidia’s announcements today are important, but long-term,” Stifel Financial Corp said in a report.
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Huang took the stage in a crowded arena in Las Vegas to kick off the CES trade show on Monday and introduce the new lineup, offering a vision of how artificial intelligence will spread throughout the economy. The company wants its products to be the heart of a future technology world with a billion human robots, 10 million automated factories, and 1.5 billion self-driving cars and trucks.
Interest in Nvidia’s products — and Hwang’s predictions — has been growing as companies rush to deploy new AI-powered computing equipment. The CEO outlined Nvidia’s products and strategy to his audience of hundreds for more than 90 minutes, including engagements with Toyota Motor Corp. and MediaTek Inc. Which led to their shares rising by more than 3%.
Before Tuesday’s pullback, Nvidia stock had more than tripled over the past 12 months. Asian suppliers, including Taiwan Semiconductor Manufacturing Co and Hon Hai Precision Industry Co, were also more optimistic about Nvidia’s prospects.
The shift to artificial intelligence will continue to drive growth over the next 10 years, Chief Financial Officer Colette Kress said during a separate event. “It will be with us for the next decade and beyond,” she said Tuesday during a JPMorgan Chase & Co. talk coinciding with CES. “We still have a lot of growth opportunities ahead for us.”
During Hwang’s presentation on Monday, he also delivered the news to his traditional audience: gamers. Nvidia is launching an update to its GeForce GPUs — short for graphics processing units — which are built with the same Blackwell design that the company uses in its AI accelerators, Huang said.
The company said the new GeForce 50 series cards will leverage Blackwell’s capabilities to create more realistic experiences for PC gamers. While traditional graphics chips build an image by calculating the shadow of each pixel in the image, the new technology will rely more on artificial intelligence to predict what the next frame should look like.
“GeForce allowed AI to reach the masses, and now AI is coming back to GeForce,” Huang said during the presentation.
The flagship RTX 5090 model will be available later this month for $1,999, with less powerful cards to follow later. Nvidia said the RTX 5070, which costs $549, will debut in February with better performance than the previous top-of-the-range model, the RTX 4090.
Until 2022, gaming was Nvidia’s largest source of sales. Now the chipmaker’s data center operation is much larger. It is on track to contribute more than $100 billion this year, as the company’s accelerator chips are appreciated by the world’s largest technology companies. The next step is to offer the hardware and software to a wider range of companies and government agencies, helping to diversify Nvidia’s revenues.
Huang announced that Toyota, the world’s largest automaker, is now a customer of Nvidia’s self-driving AI products and will use its Drive chips and software. Toyota shares in Tokyo continued their gains after this announcement.
Nvidia said expanding AI to include more of the physical world will transform industries worth $50 trillion. But the move will also bring challenges. Robots and cars will need software that can handle the complexities of real life in a safe way. Huang said the company created Nvidia Cosmos to help make robots smarter and produce fully self-driving vehicles.
Cosmos technology is capable of creating video from inputs such as text. This video then becomes the basis for virtual training, helping to reduce reliance on costly and time-consuming real-world experiences. The generated video can be searched and enhanced so that important but rare events – such as a car colliding with an emergency vehicle – can be experienced repeatedly.
Nvidia is also working with Uber Technologies Inc. To develop self-driving technology. The millions of trips Uber handles daily will provide a trove of data to train AI models.
Nvidia said mass-market automakers will shift toward using a single computer and operating system for their entire model range, rather than dividing systems by vehicle category. The company believes that this shift will pave the way for broader use of the comprehensive offerings offered by the chip designer. To speed this up, Nvidia has its products certified by government transportation safety organizations.
Nvidia now also offers a desktop PC called Project Digits. The company equips the small $3,000 device with a single Grace Blackwell Superchip — a combination of a central processor and graphics semiconductor — that works with a large chunk of memory and fast connectivity. The idea is to provide developers with hardware capable of running very large AI models, which current laptops would struggle to handle.
The new devices, developed in partnership with Taiwanese company MediaTek, will run a version of the Linux operating system and are not designed for daily use. Instead, it aims to help AI developers work locally when connecting to the cloud or using traditional computers isn’t practical or possible.
Nvidia chose MediaTek to help it create the flagship chip for Digits because of that company’s skills in making low-power semiconductors. The Taiwanese company will also offer products containing the technology to other customers, Huang said.
When asked if Project Digits indicates that Nvidia wants to enter the PC market more broadly, Huang said the device is intended for AI developers and students. But he also hinted that Nvidia has a greater interest in the sector.
“It is clear that we have plans,” he said during a press conference with financial analysts. “I’ll have to wait to tell you that.”
-With assistance from Ed Ludlow.
(Updates posts starting in second paragraph.)
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