another symbolic relief » Enrique Dance

This is another one of those events that I like to collect as symbols of changing eras or the coming future: Nvidia is set to join the Dow Jones Industrial Average in the coming days, which makes a lot of sense when you consider the evolution. companies. But also, it’s going to do this by replacing another company that was still in the index and that we talked about just recently: Intel.

What are we talking about? Essentially, from the moment the star of personal computing, having failed to maintain its level of innovation and remaining completely stagnant in the field despite the brilliance of many of its managers, was supplanted by the power of the company that had it. has been waiting for its moment for a long time, and it symbolizes a completely different way of understanding computing, largely focused on artificial intelligence, the cloud and GPUs. Another economy in which almost all activities will be supported in one way or another by artificial intelligence, just as all companies at that time began to rely on the Internet.

Entry into one of the major stock indexes is very important for a company because it usually involves immediate benefit: all funds using that index as a benchmark begin to position themselves by buying the securities of that company in order to maintain a composition similar to that of that company’s shares. index. This usually generates a lot of interest in the value, which tends to rise. There were such moments, for example, when in November 1999 Yahoo! was included in the S&P 500 index, marking what was seen as the beginning of the great rise of the Internet thanks to its growing mass adoption, or more recently when Tesla was included in the same index in December 2020, signaling to many a time when “green » economics and decarbonization are becoming increasingly relevant trends.

At that time, the companies that left the index were of little importance and did not offer replacements. In this case, even if by pure chance, the image of the relay could not be clearer: from Intel to Nvidia, from the personal computer to the cloud. From the idea of ​​simply executing programs or sets of commands to produce answers using traditional computing, to feeding very powerful data processors and answers previously obtained, to be able, through artificial intelligence, to identify, analyze and generate patterns. There are few things that better symbolize the times of change we are experiencing and what can happen to companies or professionals who don’t realize it.

On the other hand, Nvidia has already reached a valuation of $3.39 billion, making it the most valuable company in the world by market capitalization, which makes us wonder what its ceiling might be if funds do move to stock up on its titles. to continue index parallelization. Obviously, this is not the only factor: if, for example, many algorithms follow the idea of ​​reducing their complexity by using approximations to floating-point multiplication with integer addition operations, as postulated by A. paper

More recently, in order to significantly reduce computational complexity and power consumption in large neural networks (and LLMs in particular), we may have found that demand for Nvidia microprocessors is declining because they can simply do more with less, using everything they can. entail.

But one way or another, we are undoubtedly facing a change of era. And when we put dates on it, just as November 30, 2022 was marked on the calendar as the day OpenAI made ChatGPT available to users, the day Nvidia finally enters the Dow Jones Industrial Average will be another date. remember.