Jensen
Huang,
co-founder
and
chief
executive
officer
of
Nvidia
Corp.,
during
the
Nvidia
GPU
Technology
Conference
(GTC)
in
San
Jose,
California,
US,
on
Tuesday,
March
19,
2024.
David
Paul
Morris
|
Bloomberg
|
Getty
Images
Nvidia‘s
historic
rally
is
being
driven
by
its
data
center
business,
which
grew
at
a
whopping
427%
in
the
latest
quarter
as
companies
keep
snapping
up
its
artificial
intelligence
processors.
Now,
Nvidia
is
signaling
to
investors
that
the
customers
spending
billions
of
dollars
on
its
chips
will
be
able
to
make
money
off
AI,
too.
It’s
a
concern
that’s
been
swirling
around
the
company
because
there’s
only
so
much
cash
clients
can
burn
on
infrastructure
before
they
need
to
see
some
profit.
If
Nvidia’s
chips
can
provide
a
strong
and
sustainable
return
on
investment,
that
suggests
the
AI
boom
may
have
room
to
run
as
it
moves
past
the
early
stages
of
development,
and
as
companies
plan
for
longer-term
projects.
Nvidia’s
most
important
clients
for
its
graphics
processing
units
are
the
big
cloud
providers
—
Amazon
Web
Services,
Microsoft
Azure,
Google
Cloud
and
Oracle
Cloud.
They
made
up
“mid-40%”
of
Nvidia’s
$22.56
billion
in
data
center
sales
in
the
April
quarter,
the
company
said.
There’s
also
a
newer
crop
of
specialized
GPU
data
center
startups
that
buy
Nvidia’s
GPUs,
install
them
in
server
racks,
load
them
up
in
data
centers,
connect
them
to
the
internet,
and
then
rent
them
out
to
customers
by
the
hour.
For
example,
CoreWeave,
a
GPU
cloud,
is
currently
quoting
$4.25
per
hour
to
rent
an
Nvidia
H100.
This
kind
of
server
time
is
essential
in
large
quantities
to
train
a
large
language
model
such
as
OpenAI’s
GPT,
and
it’s
how
many
AI
developers
end
up
accessing
Nvidia
hardware.
Following
Nvidia’s
better-than-expected
earnings
report
on
Wednesday,
finance
chief
Colette
Kress
told
investors
that
cloud
providers
were
seeing
an
“immediate
and
strong
return”
on
investment.
She
said
that
if
a
cloud
provider
spends
$1
on
Nvidia
hardware,
it
can
rent
it
out
for
$5
over
the
next
four
years.
Kress
also
said
newer
Nvidia
hardware
would
have
an
even
stronger
return
on
investment,
citing
the
company’s
HDX
H200
product,
which
combines
8
GPUs,
providing
access
to
Meta’s
Llama
AI
model,
instead
of
raw
access
to
a
cloud
computer.
“That
means
for
every
$1
spent
on
NVIDIA
HDX
H200
servers
at
current
prices,
an
API
provider
serving
Llama
3
tokens
can
generate
$7
in
revenue
over
four
years,”
Kress
said.
Part
of
the
calculation
includes
how
the
chips
are
utilized,
whether
they
are
running
24
hours
a
day
or
less
frequently.
Nvidia
CEO
Jensen
Huang
told
analysts
on
the
earnings
call
that
OpenAI,
Google,
Anthropic
and
as
many
as
20,000
generative
AI
startups
are
lining
up
for
every
GPU
the
cloud
providers
can
put
online.
“All
of
the
work
that’s
being
done
at
all
the
[cloud
service
providers]
are
consuming
every
GPU
that’s
out
there,”
Huang
said.
“Customers
are
putting
a
lot
of
pressure
on
us
to
deliver
the
systems
and
stand
it
up
as
quickly
as
possible.”
Huang
said
Meta
has
declared
its
intention
to
spend
billions
on
350,000
Nvidia
chips,
even
though
the
company
isn’t
a
cloud
provider.
Facebook
parent
Meta
will
likely
have
to
monetize
its
investment
through
its
advertising
business
or
by
including
a
chatbot
inside
its
current
apps.
Meta’s
cluster
of
servers
is
an
example
of
“essential
infrastructure
for
AI
production,”
Huang
said,
or,
“what
we
refer
to
as
AI
factories.”
Nvidia
also
surprised
analysts
by
giving
an
aggressive
timeline
for
its
next-generation
GPU,
called
Blackwell,
which
will
be
available
in
data
centers
in
the
fiscal
fourth
quarter.
Those
comments
allayed
fears
of
a
slowdown
as
companies
wait
for
the
latest
technology.
The
first
customers
for
the
new
chips
include
Amazon,
Google,
Meta,
Microsoft,
OpenAI,
Oracle,
Tesla,
and
Elon
Musk’s
xAI,
Huang
said.
Nvidia
shares
jumped
6%
in
extended
trading,
surpassing
$1,000
for
the
first
time.
In
addition
to
announcing
earnings,
Nvidia
announced
a
10-for-1
stock
split
following
a
25-fold
surge
in
the
company’s
share
price
over
the
past
five
years.
