Why should you care about the GPU?
Now, you might wonder why an investor needs to know about GPUs. Well, consider this: The same number-crunching horsepower that makes these chips so good at generating high-quality graphics in real time is also the best solution for many other high-performance computing tasks. The leading GPU designers, Advanced Micro Devices (AMD -1.24%) and Nvidia (NVDA +3.33%), have moved beyond the basic market for graphics cards to explore a wider range of heavy-duty computing opportunities.
The hardware used in these applications is usually not consumer-grade graphics cards but specialized computing products with lots of memory and one or more GPU chips but no ports for display output. In this form, GPUs are crucially important in several high-growth technology sectors, from video games and virtual reality to artificial intelligence (AI) and cryptocurrency mining.
GPUs have become especially essential in the AI market. Unlike CPUs (central processing units) that are great at doing a few things at once, GPUs excel at doing many things simultaneously, making them ideal for training AI models that need to process vast amounts of data quickly.
Time to take action
Knowing about GPUs and their role in driving key technology sectors can be a real game-changer for investors. Pay attention to tech companies that design and manufacture GPUs (like Nvidia and AMD), but also to firms that rely on GPUs in their technology. For example, the GPU is of central importance to AI startups, gaming companies, and some cryptocurrency platforms.
Crypto mining on GPUs isn't as popular as it once was. Bitcoin (BTC +5.18%) miners are better off using special-purpose mining chips instead, and most GPU-based mining moved to Ethereum (ETH +4.35%) many years ago.
But Ethereum's platform upgrade, completed in the spring of 2023, took mining out of the equation entirely. After that game-changing shift, GPU-powered crypto mining has to work with altcoins such as Ethereum Classic (ETC +2.95%), Ravencoin (RVN +4.11%), Monero (XMR +1.06%), and Zcash (ZEC +2.09%).
These alternatives are not as robust as Bitcoin and Ethereum, and it can be difficult to trade the not-so-popular coins you're mining. So mining crypto with a GPU isn't the name of the game anymore, but crypto usage could make a comeback, and you should be aware of this sub-market's interesting history.
Understanding the GPU also empowers you when assessing the effects of market events. For instance, a global chip shortage could affect GPU manufacturers, potentially driving up prices, which would ripple through sectors that rely on GPUs.
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