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No Longer the Underdog, Nvidia Now Has a Lot to Prove

In the early years of graphics chipmaker Nvidia, when it was struggling to survive, CEO and co-founder Jensen Huang liked to remind his staff how little money it had in the bank and how quickly the business could shut, a former staffer says. It was a way to keep employees focused.

Nowadays, Mr. Huang’s exhortations aren’t necessary. Nvidia is a major supplier of chips for high-end gaming devices and machine learning equipment for data centers, generating $6.9 billion in revenue last year. And it is pushing into technology for self-driving cars. That has all made Nvidia one of the hottest tech stocks of recent years: Its shares have soared 640% since 2015, lifting its market capitalization to $90 billion and making Mr. Huang worth $3.6 billion. Chip leader Intel, by contrast, has a market worth of $165 billion on 10 times the revenue.

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Not all of Mr. Huang’s gambles paid off. Its Tegra chips, initially aimed at smartphones and tablets, didn’t pan out in those markets. Nvidia shifted its strategy for Tegra chips in 2014 and is now focused on selling them to carmakers who run them in automotive entertainment and navigation systems.

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“Competitors told me many times they expected Nvidia to fold, but Jensen wouldn't let it.”