NVIDIA - The Godfather of AI - Why the Market is Bullish
Key Message
- Q2 FY23 - The data centre business, driven by demand from cloud providers and internet companies, played a vital role, contributing $10.32 billion (76% of total revenue). Gaming revenue also grew positively to $2.49 billion.
- Products like the H100 tensor core GPU, DGX supercomputers, inference platforms, and AI Infrastructure-as-a-Service in the cloud are poised to transform AI delivery, partnered with major cloud providers.
- Today Nvidia commands 70% of the AI Chip market.
- Other Key players are AMD, ARM (Softbank) and Intel.
If you take the other Nvidia divisions separate them out and add them together, revenues were up by 9.9% to $3.18Bn. That’s another way of saying that the Nvidia datacentre business is now 3.2x bigger than the rest of Nvidia, and the datacentre business now accounts for 76.4% of the overall sales for the company.
A single chip can cost upwards of US$40K and Open AI used about 10,000 of them to train ChatGPT. If you want to train a GPT5-level model, you apparently need somewhere on the order of 20K to 25K H100 GPU accelerators, and that is somewhere around two dozen $1 billion machine
Nvidia's Economic Moat is driven by its 1st mover advantage in an AI Chip segment, supported by network effects of a multisided platform and a frictionless Flywheel.
My other posts on AI Value Chain and how Generative AI can transform Telecoms, Energy and Utilities
Source: Seekingalpha, Bloomberg, Martinfowler.com, Databricks.com Linkedin, Nvidia, Google, AWS
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