Final week, Nvidia (NASDAQ: NVDA) reported better-than-expected outcomes for the third quarter of fiscal 2024 (ended Oct. 29). The graphics processing unit (GPU) specialist’s progress was pushed by voracious demand for its merchandise that allow firms and different entities to develop and deploy synthetic intelligence (AI) expertise.
In fiscal Q3, Nvidia’s income surged 206% and its adjusted earnings per share (EPS) rocketed 593% yr over yr. Each outcomes raced by Wall Road’s estimates, as did the corporate’s top- and bottom-line steering for the fiscal fourth quarter. For This autumn, administration expects year-over-year income and adjusted EPS progress of 231% and 407%, respectively.
Earnings releases inform solely a part of the story. Administration usually shares details about an organization’s prospects on the quarterly earnings calls. Certainly, on Nvidia’s Q3 earnings name, CEO Jensen Huang and CFO Colette Kress mentioned two new markets they view as multibillion-dollar alternatives for the corporate.
1. Sovereign AI infrastructure
From CFO Kress’ remarks:
Many international locations are awakening to the necessity to spend money on sovereign AI infrastructure to help financial progress and industrial innovation. With investments in home compute capability, nations can use their very own information to coach LLMs [large language models] and help their native generative AI ecosystem. … Nationwide funding in compute capability is a brand new financial crucial and serving the sovereign AI infrastructure market represents a multibillion-dollar alternative over the following few years. [Emphasis mine.]
First, a definition: “Sovereign entities” are these which can be impartial and have whole or at the very least appreciable management inside their borders. This contains many countries, U.S. states, and the European Union. Within the U.S., Native American tribes are one other instance.
Nvidia has made some good inroads with the sovereign AI infrastructure market. Notably, in September, it introduced that it was working with the federal government of India and the nation’s largest tech firms, together with InfosysReliance Industries, and Tata Group, to enhance India’s sovereign AI infrastructure.
And earlier this month, French cloud service supplier Scaleway, a subsidiary of telecom firm Iliad Group, introduced that it is constructing a European regional AI cloud service based mostly on Nvidia’s highly effective H100 GPUs, Nvidia’s InfiniBand networking product, and Nvidia AI Enterprise software program. Scaleway gives sovereign infrastructure that “ensures entry and compliance with EU information safety legal guidelines,” Nvidia stated in November on its weblog.
CEO Huang added that the “variety of sovereign AI clouds which can be being constructed is actually fairly vital.” He stated the important thing cause is that “folks notice that they cannot afford to export their nation’s data [data used for AI training] … for anyone else to then resell AI again to them.”
2. Grace Hopper Superchip
From Huang’s remarks:
Grace Hopper is in high-volume manufacturing now. … We’re on a really, very quick ramp with our first information middle CPU [central processing unit] to a multibillion-dollar product line. … The aptitude of Grace Hopper is actually fairly spectacular. It has the flexibility to create compute nodes that concurrently have very quick reminiscence in addition to very massive reminiscence. [Emphasis mine.]
The just-reported fiscal third quarter was the primary quarter that Nvidia generated income from gross sales of its new GH 200 Grace Hopper Superchip. Huang stated that the corporate is anticipating a giant yr subsequent yr for this product given the numerous design wins the corporate has had.
Nvidia describes the GH200 Grace Hopper Superchip as a “breakthrough accelerated CPU designed from the bottom up for giant-scale synthetic intelligence and high-performance computing.” This superchip combines Nvidia’s ARM-based Grace CPU with a Hopper GPU. Mainly, it brings collectively the strengths of the GPU and the CPU.
Kress stated that Grace Hopper situations at the moment are accessible at GPU-specialized cloud service suppliers and are coming quickly to Oracle Cloud. Furthermore, in fiscal Q3, a number of supercomputing entities acquired shipments of the superchips, together with the Los Alamos Nationwide Lab within the U.S. and the Swiss Nationwide Supercomputing Heart.
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Beth McKenna has positions in Nvidia. The Motley Idiot has positions in and recommends Nvidia and Oracle. The Motley Idiot has a disclosure coverage.
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