Nvidia's IPO on January 22, 1999

The biggest company in the AI era held its IPO during the dotcom era, on January 22, 1999. That company was Nvidia, who offered 3.5 million shares priced at $12 each. It had been founded April 5, 1993.

The IPO was successful, raising $42 million for the young company. By day's end, the stock was trading at $21 per share. This was a nice increase, but not a large increase by dotcom standards. Its $73.5 million market capitalization in 1999 might seem modest compared to its November 2025 market capitalization, which valued the company at $4.718 trillion.

Meanwhile, VA Linux's IPO reached a record-setting $239 per share and valued the company at $9.5 billion. Today, VA Linux is a subsidiary of Gamestop, the video game retailer. So why did investors value companies like VA Linux so highly and completely miss on what would become the largest company in the world?

What Nvidia does

Nvidia is worth $4.7 trillion today because people think of it as the brains behind AI. In 1999, Nvidia was just a maker of graphics chips. Those two things are exactly the same thing. But people didn't know that in 1999. I'm not sure how many people knew that even as late as 2019.

In 1999, people thought of Nvidia as a company that made video games faster. Its GPUs worked by performing calculations in parallel. As the GPUs got bigger and faster, they became useful for running AI models. GPUs are also very good at crypto, so crypto cowboys were buying Nvidia GPUs to mine cryptocurrency. As crypto boomed, it took Nvidia along with it. These two things meant GPUs weren't just for video games anymore.

But these two things weren't on the near horizon in 1999. It took time for them to develop.

Another wrinkle was the dotcom boom was largely fueled by people who missed out on Microsoft's IPO. They wanted to find the next Microsoft, which they assumed would be a software company. They weren't looking for a hardware company. So it was a lot easier for software companies to reach huge heights in the dotcom era.

But this is all easy to say in retrospect. If predicting the next big thing was easy, we'd all be multi millionaires.

How Sega bailed out Nvidia in 1996

Today Nvidia is one of the most successful companies in the world. But it struggled early on and at one point was in danger of not surviving long enough to reach the IPO stage.

Three years after its founding in 1993, Nvidia partnered with Sega to design the video for the Dreamcast console in 1996. Nvidia's chip wasn't up to the task Sega was asking of it, they were out of money, and couldn't finish the project. Sega bailed them out with a $5 million investment in the company. Sega made its money back along with a $10 million profit, so it worked out fine for Sega in the end. The Dreamcast ended up with a chip manufactured by NEC in the Dreamcast, after Sega also considered a chip designed by 3dfx.

The money from Sega helped Nvidia introduce the Riva 128 chip, which sold more than a million units and led to the successful TNT2, followed by the GeForce 256. If it hadn't been for Sega's investment, Nvidia could have gone out of business before 3dfx did, and perhaps 3dfx would have survived instead. Instead, Nvidia purchased most of 3dfx's intellectual property on December 15, 2000. 3dfx wound down operations and went bankrupt October 15, 2002.