Nvidia was founded in 1993 as a modest startup with the goal of developing 3D graphics for video games and other media. Today, everyone knows Nvidia as an absolute titan of the GPU industry. Even Chinese graphics cards can’t compete with Nvidia GPUs, which power the highest-end video game graphics and accelerate the use of generative AI. The company is so powerful that Nvidia lost $1 trillion in market value in 2026 and still took it in stride.
However, Nvidia almost ceased to exist in 1996 after failing to fulfill a major contract for Sega, a very popular game console manufacturer at the time. Sega was developing the Dreamcast console and Nvidia was chosen to build a graphics chip for the Dreamcast. Unfortunately, the startup invested all its money in an outdated graphics rendering method and the contract had to be abandoned. Without this, Nvidia would not have enough funds to continue operations.
The Dreamcast eventually ended up with a graphics chip called “Holly”, built by VideoLogic (now known as Imagination Technologies). But that’s not the end of the story for Nvidia. Sega of America boss Shoichiro Irimajiri still believed in Nvidia and its CEO, Jensen Huang. With Irimajiri’s suggestion, Sega invested $5 million in Nvidia, or about $10.6 million today after inflation. The world’s largest semiconductor company would not have survived to become so dominant without Sega’s help at the time.
Nvidia’s meteoric recovery
With the $5 million investment received from Sega, Nvidia had “six months to live” according to Huang (via CNBC). At that time, Nvidia was developing the RIVA 128 chip, compatible with Microsoft’s DirectX software interface. DirectX had become the standard for gaming platforms, and by building to accommodate it, Nvidia managed to develop a successful product that sold over a million units.
Nvidia had become a force to be reckoned with. The company was credited with inventing the GPU in 1999, the same year it went public at $12 per share. Meanwhile, Sega had to stop making consoles after what happened to the Dreamcast; the console was a commercial failure after its international release in 1999. There was, however, a silver lining for Sega amid this financial turmoil: it was able to sell its shares in Nvidia for $15 million, tripling that initial investment.
Nvidia is now a very different company from the struggling startup that nearly died in the mid-’90s. At the time of writing, Nvidia’s record closing stock price was $235.47, nearly 20 times its IPO price. The company is now doing more than just innovating graphics technology; Nvidia is running unexpectedly hot data centers as part of its ongoing efforts to maximize the value of AI investments.
