Nvidia’s dominance reflects the CEO’s unique business logic

But its sprawling reach also reflects a business logic that paradoxically excludes all but the essentials.

“If we can avoid doing something, we will," co-founder and Chief Executive Jensen Huang said March 19, during a press conference at its GTC developers’ conference in San Jose, Calif.

Huang’s approach has led to remarkable growth since the company’s founding in 1993 and a recent reign as the world’s most valuable company. Even after China’s DeepSeek called into question the extent of future demand for high-end systems to train AI, not to mention the global stock selloff triggered by President Trump’s new tariffs, Nvidia on Friday afternoon had a market cap of $2.71 trillion—the third-highest in the world behind Apple and Microsoft, and ahead of Amazon.com and Alphabet.

While the scope of the company has expanded over the years from making chips for videogames to producing all manner of AI infrastructure, that principle of restraint has remained.

Focusing on what is both essential and foundational has powered Nvidia’s growth. It’s able to do so many things because it knows what it can’t or won’t do.

During the GTC event, Huang fielded a question about the company’s many partners and whether it was putting itself in a difficult position by competing in some instances with them. It is a common dynamic and source of contention for companies in tech and beyond. Amazon, for example, offers in-house brands that can compete with other sellers on its platform, much to those merchants’ displeasure.

“Obviously we did a very poor job explaining what we do," Huang responded. He acknowledged that Nvidia provides technology across AI infrastructure, networking, switches, storage and of course computing of every size, shape and form. “However—this is the however—we build everything, but we offer it to the world however they would like to take it," he said. “And the reason for that is we are not a solutions company."

Instead of selling its customers or partners finished solutions, Nvidia typically leaves them to decide how much of the last 50% of value creation they want to develop on their own. That makes it easier for enterprise tech companies to work with Nvidia, according to Huang. In theory, it also makes it easier for multiple companies in a single industry such as automobiles to build on top of Nvidia platforms and still differentiate themselves.

Nvidia’s discipline pays off internally as well.

Its 36,000 employees make it much smaller than other big tech companies in Silicon Valley, and Huang wants to put that “very scarce energy" to best use, he said this month as he received an Edison Achievement Award for innovation and innovators. That means focusing on work that Nvidia’s people consider worthy of their time, which is a strong motivator, he said.

Take the architecture of data centers. In recent decades, the idea was to link together huge numbers of cheap, commodity servers. But Nvidia believes in scaling up before scaling out—making a rack of computers as powerful as possible before they are yoked together in a vast infrastructure.

The risk to Nvidia at the strategic level is that another innovator, such as an open-source rival, calls its “scale up-scale out" equation into question. The rise of DeepSeek’s R1 model did just that, at least for a moment, because it seemed to have been trained using older infrastructure. (Huang said that the proliferation of such reasoning models actually means the world needs 100 times more computing power than it thought it needed last year.)

But Nvidia’s approach keeps its workforce motivated.

“Notice, when you come talk to us, not one employee ever says, ‘We fight for share,’" Huang said at the Edison ceremony. “Why fight for share? Create something new."

And more than any single technological innovation, Nvidia’s success turns on its ability to create an interconnected system in which customers and partners contribute to its infrastructure or build on top of it.

While that in itself isn’t unique, the implementation is, thanks to the breadth of the core infrastructure, the focus on supremely difficult and essential problems, and a strategic sense of where not to apply its resources.

Says Huang: “We want to enable the ecosystem."

Write to Steven Rosenbush at steven.rosenbush@wsj.com