Visualizing Moore’s Law in Action (1971-2019)
Animation: Visualizing Moore’s Law in Action (1971-2019)
The pace of technological progress keeps accelerating.
There are many ways to show this, but perhaps the simplest way is to create a visual representation of Moore’s Law in action.
Today’s animation comes to us from DataGrapha, and it compares the predictions of Moore’s Law with data from actual computer chip innovations occurring between 1971 to 2019.
Defining Moore’s Law
Moore’s Law was originally derived from an observation by Gordon Moore, the co-founder of Fairchild Semiconductor and later the co-founder and CEO of Intel.
In 1965, Moore wrote that the number of components in a dense integrated circuit (i.e., transistors, resistors, diodes, or capacitors) had been doubling with every year of research, and he predicted that this would continue for another decade.
Later on in 1975, he revised his prediction to the doubling occurring every two years.
Like the animation, the following chart from Our World in Data helps plot out the predictions of Moore’s Law versus real world data — note that the Y Axis is logarithmic:
The prophetic prediction of Moore’s Law has led to exponential progress in computing — as well as for everything else touched by computers.
It’s no surprise then, especially given that the modern information age is largely driven by increasingly efficient computing, that this law has had a trickle down effect on nearly every significant aspect of global innovation.
An Accelerated Pace of Change
Moore’s Law has translated into a faster rate of change for society as a whole.
A new idea, like the smartphone, can get immediate traction because of instantaneous communication, increased global connectivity, and the ubiquity of information. New tech advancements can now change business or culture in a heartbeat:
Further, since software is a “layer” built upon the foundation of computing, it means that digital products can be replicated at almost no marginal cost. This is why a phenomenon like Pokémon Go was able to captivate 50 million users in just 19 days.
Imagine this kind of scalability, when applied to things like artificial intelligence or virtual reality.
Is Moore’s Law Dead or Alive?
As with any enduring prediction, there are always naysayers out there that will boldly forecast an imminent end to the trend.
Since the 2000s, there has been an ongoing debate within the semiconductor community on whether Moore’s Law will continue its reign, or if progress will ultimately sputter out as certain physical limitations catch up with the process of miniaturization.
Earlier in 2019, Nvidia CEO Jensen Huang declared that Moore’s Law is no longer possible. For what it’s worth, Intel still says technology in chipmaking always finds a way to advance — while TSMC has recently said the law is actually alive and well.
Regardless of who is right, Moore’s Law has held true for close to 50 years, and its repercussions will continue to be felt in almost every aspect of life and society going forward.
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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