How Microsoft and Nvidia Outpaced Apple in the AI Revolution
Last month, AI chip leader Nvidia briefly claimed the title of the world’s richest company, surpassing Microsoft, which had itself recently overtaken Apple. This news was met with spontaneous applause at a tech industry event I attended in Copenhagen. Although Nvidia has since slipped back to second place, with its market value dipping to $3 trillion compared to Microsoft’s $3.4 trillion, the ascent of these two tech giants underscores the impact of AI and foresight on their fortunes.
Microsoft’s early investment in OpenAI, the creator of the widely popular ChatGPT, started back in 2019. At the same time, Nvidia’s CEO Jensen Huang had the foresight to steer his company towards AI chip development well before the surge in generative AI. These strategic moves have paid off, leaving Apple trailing. But how long can they maintain their lead?
At this year’s London Tech Week, the emphasis on AI was unmistakable. The term “AI” dominated every booth and speech. Anne Boden, founder of fintech disruptor Starling Bank, expressed her excitement about the AI revolution reshaping the tech landscape. She noted that the sector is once again uncertain about its future leaders and losers due to AI’s transformative potential.
The focus on AI was also prevalent at the Founders Forum, an exclusive gathering of top entrepreneurs and investors. Despite the buzz, the Financial Times highlighted a sobering reality: over half of the stocks in Citigroup’s “AI winners basket” had declined in value in 2024, reminding us of the rapid pace of change in the tech world.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, cautions that the soaring valuations of tech companies could lead to significant drops if expectations aren’t met, likening it to the dot-com bubble. In 2023, it seemed any company associated with AI could easily secure funding. However, investors and clients are becoming more discerning. Saurabh Dayal, an AI project scout for an investment firm, often finds himself correcting misleading claims about AI.
Citi’s Stuart Kaiser emphasizes that merely mentioning AI repeatedly is no longer enough to attract investors. Moreover, the hype around generative AI products has sometimes led to disappointment due to inaccuracies, biases, and other issues. Early AI-enabled devices like the Rabbit R1 and Humane Pin have also faced criticism.
Chris Weston, chief digital and information officer at tech service firm Jumar, notes that businesses are wary of integrating unproven AI technologies that could undermine client trust. Tech analyst Paolo Pescatore believes the AI sector must deliver meaningful growth to avoid a bubble burst but remains optimistic about its short-term prospects as companies ramp up their AI initiatives.
There’s also a growing concern about the environmental impact of AI. A study predicts that by 2027, the AI industry could consume as much energy as a country the size of the Netherlands. Professor Kate Crawford from the University of Southern California and Dr. Sasha Luccioni from Hugging Face both highlight the immense energy demands of AI, which currently rely heavily on non-renewable resources.
Despite the uncertainties, another shake-up among the world’s wealthiest firms seems inevitable. For now, Apple faces a significant challenge in catching up with Microsoft and Nvidia in the AI race.
