Nvidia, the prominent chipmaker, has experienced an incredible surge in market value, surpassing tech giants like Microsoft and Apple, propelled by its dominance in AI and accelerated computing. As Nvidia’s stock continues to soar, the energy demands of AI have brought nuclear power into the spotlight as a crucial solution for sustainable growth.
Nvidia’s Meteoric Rise and Net Zero Game
In May last year, Nvidia, valued at approximately $750 billion, revealed its first fiscal quarter results for 2024. Revenue saw a 19% increase, and net income rose by 26%, reflecting positive but not exceptional performance. However, what sparked excitement was Nvidia’s forecast for the following quarter, predicting a remarkable 65% revenue surge. CEO Jensen Huang emphasized the company’s leadership in accelerated computing and generative AI, foreseeing a significant shift towards these technologies in global data center infrastructure. This forecast led investors to view Nvidia as seizing a trillion-dollar opportunity, propelling its stock price to record highs. The day after, Nvidia’s market cap surged by nearly $200 billion, marking the beginning of an unprecedented rally.
By June 2023, Nvidia’s market cap had surpassed $1 trillion, reaching $2 trillion on March 1, 2024, and exceeding $3 trillion just over three months later. Following a stock split, Nvidia’s market cap currently stands at $3.34 trillion, surpassing Microsoft and Apple, making it the world’s most valuable company. Noteworthy metrics for Nvidia include its high gross margin of 78.4% in the latest quarter, compared to 46.6% for Apple and 70.1% for Microsoft. Additionally, Nvidia’s revenue growth over the past year was impressive at 208%, in contrast to Apple’s 1% decline and Microsoft’s 14% growth, as reported by Statista. While investors have relished this rapid ascent, questions linger regarding the sustainability of Nvidia’s current high valuation. Furthermore, some environmental critics are raising concerns about the company’s climate commitments and net zero targets.
In Nvidia’s FY2023 Corporate Responsibility Report, the company outlines its key sustainability goals and metrics. By the end of fiscal year 2025 and annually thereafter, Nvidia aims to achieve and maintain 100% renewable electricity for its offices and data centers under its operational control. Nvidia’s Blackwell GPUs, introduced in March 2024, are reportedly 25 times more energy-efficient than traditional CPUs for specific AI and high-performance computing workloads. Nvidia’s technologies currently power 23 of the top 30 systems on the latest Green500 list. However, beyond these initiatives, there is no clear net zero strategy outlined in the chipmaker’s report, only Nvidia’s greenhouse gas emissions.
The Environmental Footprint of AI and Chips
Many believe that Nvidia is at the forefront of the AI boom. As AI capabilities advance and expand, the need for energy to fuel its exponential growth also increases. The environmental impact of using chips is well-documented, with researchers from Lancaster University estimating that information and communications technologies, including data centers, contribute between 1.8% and 2.8% of global greenhouse gas emissions. The International Energy Agency predicts that the sector’s electricity consumption could double from 2022 to 2026, reaching 4% of global demand, equivalent to Japan’s current energy use. This rising demand has hindered the retirement of coal-fired power plants, according to Bloomberg.
Less understood is how to mitigate the energy and environmental impact of manufacturing advanced chips used in data centers and large AI models. A chip’s carbon footprint spans its entire production chain, from mining essential metals to using 1000-degree Celsius ovens during fabrication, and its energy consumption throughout its lifespan. Advanced chips, featuring wires as thin as 10 nanometers, require high-energy photons with short wavelengths for fabrication. State-of-the-art lithography processes significantly contribute to the carbon footprint of modern computing. According to Gage Hills, Assistant Professor of Electrical Engineering at Harvard John A. Paulson School of Engineering and Applied Sciences, the energy required to manufacture a computer chip can exceed the amount it consumes over its entire 10-year lifespan.
Great Power Comes Great Energy Demand
The excitement surrounding AI has intensified, with projections indicating that global spending on AI will surpass $300 billion by 2027. This surge has reignited interest in renewable energy sources to meet the escalating power demand while considering environmental impact. Notably, it has propelled nuclear power into the spotlight as a viable, clean energy source capable of meeting the substantial energy requirements for chip production and AI infrastructure. The U.S. nuclear fleet is expected to play a crucial role in meeting these rising power needs by 2030.
In Texas alone, data centers have requested the energy equivalent of 41 nuclear power plants to sustain their operations. Silicon Valley giants like Microsoft’s Bill Gates, Amazon’s Jeff Bezos, and numerous venture capital firms have invested in nuclear startups to support their data center operations. Sam Altman, CEO of OpenAI, emphasized the urgency, describing a “desperate need for as much energy as we can manufacture.” Investors eyeing opportunities in AI typically focus on ETFs containing semiconductor, cloud computing, and cybersecurity firms. However, there is also significant interest in utilities operating nuclear power plants and shares linked to nuclear power generation and uranium fuel.
The appeal of nuclear power lies in its ability to provide compact, reliable, weather-independent electricity through fission, making it ideal for powering AI data centers. This demand is boosting uranium prices globally as supply struggles to keep pace. These developments have the potential to redefine nuclear energy’s role in the global energy landscape, potentially aiding significant decarbonization efforts. Nvidia’s ascent to becoming the world’s most valuable company is further elevating nuclear power to meet the energy demand of the chipmaking industry. However, the world awaits Nvidia’s disclosure of its net zero strategy.
