Visualizing the Trillion-Fold Increase in Computing Power
On July 20, 1969, millions of people received an inspirational jolt from watching two brave astronauts take humankind’s first steps on the moon. Rightly so, those astronauts, Neil Armstrong and Buzz Aldrin, are now household names to many – however, their Apollo Guidance Computer (AGC) remains the unsung hero that made their moon landing possible in the first place.
With processing power equivalent to a pair of Nintendo consoles, the AGC wasn’t flashy. But despite its technical limitations, the AGC functioned admirably as the interface for guidance, navigation, and control of the spacecraft to get humans to their first lunar destination.
To Infinity and Beyond?
If a pair of Nintendo consoles can get us to the moon, there’s no telling what the future may hold as computing power continues to grow.
Today’s infographic comes to us from Experts Exchange, and it visualizes the 1 trillion-fold increase in computing performance from 1956 to 2015.
The Incredible Shrinking Hard Disk
In the 1970s, data storage equipment was serious business. The IBM 305 RAMAC, for example, weighed a ton and measured 16 square feet. The RAMAC’s storage capacity? Just 5MB.
Thankfully, hard disks are no longer the size of filing cabinets. The animation below visualizes just how compact terabytes of storage have become.
Computing in the Real World
A relatable touchpoint for many people will be ever-changing graphics quality of video games.
The journey from Atari’s pixelated stick figures to today’s crisp, hyper-realistic graphics is a surprisingly good visual aid to help us understand increases in computing power over many years.
The journey from Pong to Call of Duty is inexorably linked to processing power. As the comprehensive list below demonstrates, modern gaming systems are so powerful that even the revolutionary Xbox 360 now looks quaint in comparison.
|1976||0||Fairchild Channel F (Pong)|
|2000||6,200||Sony PlayStation 2|
|2006||459,200||Sony PlayStation 3|
|2013||1,843,200||Sony PlayStation 4|
Our ExaFLOP Future
Though performance drivers are flattening out, supercomputing continues to hit new milestones. The next one on the list is exascale computing – and at that level, machines will be capable of a million-trillion calculations a second.
Why do we even need computers that powerful? For one, some of the biggest challenges facing humankind are extremely complicated, and we just don’t have the computing power to tackle them as effectively as we could. Two relevant examples are climate modeling and life sciences.
All these advances are pushing us closer to a major symbolic milestone: computers as powerful and complex as the human brain.
Nvidia Joins the Trillion Dollar Club
America’s biggest chipmaker Nvidia has joined the trillion dollar club as advancements in AI move at lightning speed.
Nvidia Joins the Trillion Dollar Club
Chipmaker Nvidia is now worth nearly as much as Amazon.
America’s largest semiconductor company has vaulted past the $1 trillion market capitalization mark, a milestone reached by just a handful of companies including Apple, Amazon, and Microsoft. While many of these are household names, Nvidia has only recently gained widespread attention amid the AI boom.
The above graphic compares Nvidia to the seven companies that have reached the trillion dollar club.
Riding the AI Wave
Nvidia’s market cap has more than doubled in 2023 to over $1 trillion.
The company designs semiconductor chips that are made of silicon slices that contain specific patterns. Just like you flip an electrical switch by turning on a light at home, these chips have billions of switches that process complex information simultaneously.
Today, they are integral to many AI functions—from OpenAI’s ChatGPT to image generation. Here’s how Nvidia stands up against companies that have achieved the trillion dollar milestone:
|Joined Club||Market Cap|
|Peak Market Cap
Note: Market caps as of May 30th, 2023
After posting record sales, the company added $184 billion to its market value in one day. Only two other companies have exceeded this number: Amazon ($191 billion), and Apple ($191 billion).
As Nvidia’s market cap reaches new heights, many are wondering if its explosive growth will continue—or if the AI craze is merely temporary. There are cases to be made on both sides.
Bull Case Scenario
Big tech companies are racing to develop capabilities like OpenAI. These types of generative AI require vastly higher amounts of computing power, especially as they become more sophisticated.
Many tech giants, including Google and Microsoft use Nvidia chips to power their AI operations. Consider how Google plans to use generative AI in six products in the future. Each of these have over 2 billion users.
Nvidia has also launched new products days since its stratospheric rise, spanning from robotics to gaming. Leading the way is the A100, a powerful graphics processing unit (GPU) well-suited for machine learning. Additionally, it announced a new supercomputer platform that Google, Microsoft, and Meta are first in line for. Overall, 65,000 companies globally use the company’s chips for a wide range of functions.
Bear Case Scenario
While extreme investor optimism has launched Nvidia to record highs, how do some of its fundamental valuations stack up to other giants?
As the table below shows, its price to earnings (P/E) ratio is second-only to Amazon, at 214.4. This shows how much a shareholder pays compared to the earnings of a company. Here, the company’s share price is over 200 times its earnings on a per share basis.
|P/E Ratio||Net Profit Margin (Annual)|
Consider how this looks for revenue of Nvidia compared to other big tech names:
$NVDA $963 billion market cap, 38x Revenue
$MSFT $2.5 trillion market cap, 12x Revenue$TSLA $612 billion market cap, 7.8x Revenue$AAPL $2.75 trillion market cap, 7.3x Revenue$GOOG $1.6 trillion market cap, 6.1x Revenue$META $672 billion market cap, 6x Revenue pic.twitter.com/VgkKAfiydx
— Martin Pelletier (@MPelletierCIO) May 29, 2023
For some, Nvidia’s valuation seems unrealistic even in spite of the prospects of AI. While Nvidia has $11 billion in projected revenue for the next quarter, it would still mean significantly higher multiples than its big tech peers. This suggests the company is overvalued at current prices.
Nvidia’s Growth: Will it Last?
This is not the first time Nvidia’s market cap has rocketed up.
During the crypto rally of 2021, its share price skyrocketed over 100% as demand for its GPUs increased. These specialist chips help mine cryptocurrency, and a jump in demand led to a shortage of chips at the time.
As cryptocurrencies lost their lustre, Nvidia’s share price sank over 46% the following year.
By comparison, AI advancements could have more transformative power. Big tech is rushing to partner with Nvidia, potentially reshaping everything from search to advertising.
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