The Future of Compute: Nvidia's Crown Is Slipping
69 comments
·April 21, 202501100011
voidspark
> everyone who has so far proven unable to compete
The article explains that Nvidia's biggest customers (50% of datacenter revenue) are switching to their own hardware.
mushufasa
I'm skeptical of this. They have been doing this for a decade already. So far, those same companies have just become bigger and bigger customers of NVIDIA.
NVIDIA is very strategic about building product to avoid commodification -- both by building out network effects where software is tied to their proprietary sdk libraries, and by always focusing on being at the cutting edge of product.
Both these things can be true: a large company should try to build their own hardware to reduce supplier risk, and a large company should be open to suppliers that have better product that delivers business value.
So far, these large companies' internal hardware has been useful internally but never a complete replacement for NVIDIA, which keeps staying at the cutting edge of new capabilities.
NVIDIA already faced existential risk when Intel was commodifying all the dedicated motherboard components in the late 90s, 2000s, (like sound cards etc), so they're hyper-aware of this.
makeitdouble
But then they're not boosting NVidia's competitors either, so wouldn't NVidia stay in the top position in their market ?
The article seems focused more on stock price and where to bet, than the market for GPUs or generic hardware vendors.
dwattttt
> But then they're not boosting NVidia's competitors either, so wouldn't NVidia stay in the top position in their market ?
Nope; if hypothetically 100% left NVidia, whether to their own hardware or to not use GPUs at all, it'd be easy to say NVidia would be last in the market
mycall
By switching to their own hardware, they become NVidia's competitors.
kadushka
Seems like the opposite to me: https://www.datacenterdynamics.com/en/news/google-in-talks-t...
voidspark
You linked to an article about Google renting an insignificant amount of additional capacity.
Google runs AI / HPC workloads on their own hardware and has been doing that for more than a decade. Google Gemini was trained on TPUs developed in house. It does not run on Nvidia hardware.
monocasa
And something like 90% of Nvidia's revenue at this point is from the datacenter market.
solardev
As a gamer, I selfishly wish that Nvidia would go back to being a gaming company instead of a crypto and AI compute company. I miss MSRP graphics cards :(
almostgotcaught
NVIDIA ain't spent much time in the NFL else they would've known "...when you’re bleeding a guy you don’t squeeze him dry right away. Contrarily, you let him do his bidding suavely. So you can bleed him next week and the week after at minimum."
CapsAdmin
I guess some people just want to doom, but after getting into stocks late in life, I can't shake the feeling that some do it for a purpose.
ivape
Interesting, Marvell is actually down over 50% this year. I just don't understand the bear case at all. I'm a nobody and I'm still willing to buy a $1500 gpu, and that GPU still can't do what the cloud does. The next $1500 gpu probably can't either. It feels like we're over thinking this. The hardware roll-out is all there is imho. Jensen has mentioned he sees Nvidia being a 10 trillion-dollar company, and I'm willing to meet him half-way with my faith here.
Edit:
- I wonder what's stopping Nvida from releasing an AI phone
- A LLM competitor service (Hey, how about you guys make your own chips?)
- They are already releasing an AI PC
- Their own self driving cars
- Their own robots
If you mess with them, why won't they just compete with you?
Just wanted to say one more thing, that Warren Buffet famously said he regretted not investing in both Google and Apple. I think something like this is happening again, especially as there are lulls that the mainstream public perceives, but enthusiasts don't. To maintain the hyperbole, if you are not a full believer as a developer, then you are simply out of your mind.
Fade_Dance
>I wonder what's stopping Nvida from releasing an AI phone
It's a low margin business and would hurt the balance sheet more than the completely irrelevant revenue from a project like that.
I've been investing in semi for decades and what strikes me about this recent cycle is that so many don't seem to understand that semi is a highly cyclical business that is prone to commoditization waves and inventory/capacity overbuild.
And speaking as a trader, instead of reinforcing your firmly held base case, I'd strongly consider painting out the bear cases. Look at the roadmaps of the hyperscalers that are designing their own chips for internal use, etc. And never use the word faith when it comes to markets.
You could easily see NVIDIAs margins get chopped down, and see the multiple re-rate lower from here. Actually, I'd argue the name is well on the way down this path already.
It's almost guaranteed to happen sooner or later. Semi down cycles are usually brutal for semi equities.
That's not to say it isn't a great company. It's certainly not a Buffett name though.
fnordpiglet
Gaming GPUs is a side business for them at this point. It’s all about AI.
chneu
Gosh, I have a coworker who acts like gaming GPUs are the only hardware that matters.
I've tried explaining that one or two AI data center clients for Nvidia dwarfs the entire gaming GPU market, but he just doesn't get it.
aleph_minus_one
> Gosh, I have a coworker who acts like gaming GPUs are the only hardware that matters.
> I've tried explaining that one or two AI data center clients for Nvidia dwarfs the entire gaming GPU market, but he just doesn't get it.
I have a feeling that the different judgements come from the fact that the coworker thinks that the AI bubble will soon burst - thus, in his judgement, the AI data center sector of Nvidia is insanely overvalued, and will collapse. What will "save" Nvidia then will be the gaming GPUs. Thus, in his opinion, this is the sector that matters most for Nvidia, since it will become Nvidia's lifeline when (not "if"! - in your coworker's judgement) things will go wrong in AI.
You, on the other hand believe AI data centers are here to stay (which is a bold assumption: it could happen that AI will move more to the edge), and no big competition will arise for NVidia for "big AI ASICs" (another bold assumption). Your judgment is based on these two strong assumptions about the future, while your coworker's is based on different (possibly similarly bold) assumptions.
ryao
Around 15 years ago in college, I took the opposite position that datacenter workloads mattered more to Nvidia’s future than gaming and no one believed me. It is amazing how times have changed.
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arvinsim
The supply, driver, and hardware issues that the 5000 generation of gaming GPUs has right now do show that gaming GPUs are an afterthought to them.
kortilla
To drive this point home, look at the nvidia valuation in 2010 or so before crypto gave them a non-gaming dominant business line.
tintor
Their upcoming AI PC is dead of arrival since they announced its underwhelming memory bandwidth.
adventured
They'll do ~$110 billion in operating income over the next four quarters, with a mere 36,000 employees and no meaningful dividend or debt to maintain. I think they can trivially afford to keep trying if they see a market.
alephnerd
> I wonder what's stopping Nvida from releasing an AI phone
B2C is a hellish headache that has marginal returns if you are not B2C first, and the amount of investment needed to be B2C competent just isn't worth it when there are alternative options to invest in
> A LLM competitor service (Hey, how about you guys make your own chips
Already exists. AI Foundary
> They are already releasing an AI PC
It's just an OEM rehash
> Their own self driving cars
Not worth the headache and also losing customers like Google or Amazon due to competitive pressure
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Cannot reply: releasing their own "Nvidia Car" means they will lose their existing automotive partners becuase they will not spend on a competitor. Same reason Walmart stipulates EVERY tech vendor must decouple from AWS when selling to them.
MikeTheGreat
> Walmart stipulates EVERY tech vendor must decouple from AWS when selling to them.
I'm curious to know more about this if you (or anyone else) can elaborate on it.
What constitutes a tech vendor? Are you talking about Walmart buying PCs from Dell, from buying/renting a SaaS from someone, from IT-consulting coming in to do a one-time service for them (even if that service takes years)?
You're not talking about stuff like "Apple wants to sell iPhones to Walmart customers", I assume - yes?
mycall
NVidia is perfect tech for Software Defined Vehicles. Maybe if they made a car to kick start the industry, it might go places.
VirusNewbie
They have a whole huge self driving car division, they just partner with existing car companies.
bsder
> I just don't understand the bear case at all. I'm a nobody and I'm still willing to buy a $1500 gpu, and that GPU still can't do what the cloud does.
Agreed, and for all the "price crash" I still can't just whip out my credit card and purchase an hour or two on an H100/B100.
It's still multi-year contracts and "Contact Sales".
KerrAvon
I agree the concern here about Nvidia's long term viability seems overblown.
WRT your edit: The answer to all of this is that it's very hard and requires a huge amount of investment to produce good vertical solutions in each of these spaces. You cannot build a good AI phone without first building a good phone. You cannot build a self-driving car without starting with a good car, etc. For robots, I'll point you to someone using Nvidia chips: the Matic is a complete ground-up rethink of how robot vacuums should work. It's taken them 7 years to get to early adopter phase.
hector_vasquez
> You cannot build a good AI phone without first building a good phone. You cannot build a self-driving car without starting with a good car, etc.
More like you cannot build a self-driving car without starting with a good phone. See Huawei.
lvl155
I am starting to think AMD is doing this on purpose and they have some secret handshake deal with Nvidia. Nvidia has at least two more years of “sellout at any price” market. Not because they have the best solution (which they do atm) but because they basically share the monopoly with Apple at TSMC. And Apple is content wasting that away on iPhones.
Havoc
They’re basically going from a functional monopoly to having to compete.
Not ideal for them but hardly a death blow
alephnerd
Services! Services services services!
This is what will help protect Nvidia now that DC and cluster spend is cooling.
They own the ecosystem thanks to CUDA, Infiniband, NGC, NVLink, and other key tools. Now they should add additional applications (the AI Foundry is a good way to do that), or forays into adjacent spaces like white-labeled cluster management.
Working on building custom designs and consulting on custom GPU projects would be helpful as well by helping monetize their existing design practice during slower markets.
Of course, Nvidia is starting to do both, with Nvidia AI Foundry for the former and is working on the latter by starting a GPU architecture and design consulting as announced at GTC and under McKinney
bee_rider
Yeah, that immediately came to mind—they talk about distributed systems being a problem, but Nvidia owns the battle-tested and well-regarded HPC networking hardware (Infiniband).
There’s maybe some wiggle room, in that these AI distributed systems might not (?) look like HPC/scientific computing systems—maybe they don’t need Infiniband style low latency. So these other funky networks might work.
But like, Nvidia has the good nodes and the good network. That’s a rough combination to compete against.
voidspark
> They own the ecosystem thanks to CUDA, Infiniband, NGC, NVLink,
No they do not. The article explains that Google, Amazon, Microsoft, and Meta are developing their own hardware and software for AI/HPC.
Google Gemini was not trained using CUDA or Nvidia hardware.
liuliu
Only one of the 4 companies you mention is successful at this. And it will remain that way.
Chinese CSPs are the only ones can develop their own hardware / software for AI / HPC.
scrlk
> Working on building custom designs and consulting on custom GPU projects would be helpful as well by helping monetize their existing design practice during slower markets.
Apart from Nintendo, who has successfully partnered with Nvidia? Apple, Microsoft and Sony have all been burnt in the past.
schaefer
Watch the Nvidia GTC keynote. The list of partners is extensive.
AlotOfReading
Being a partner on the GTC slidedecks isn't remotely good evidence that they haven't been burned by Nvidia.
alephnerd
National Labs (kinda), a big pharma company I don't think I can disclose, and a couple HFTs, but it's a muscle they will need to build out, because Broadcom are Marvell are eating their cake.
Nvidia has started formalizing that last year [0], but it's a new muscle for them.
[0] - https://www.reuters.com/technology/nvidia-chases-30-billion-...
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echelon
> While the H100 generation likely represents peak pricing power (new B200s have lower margins and higher COGS), an immediate lack of alternatives means they’ll continue to print cash.
That's not a trend yet. We're about to enter an era where most media is generated. Demand is only going to go up, and margins may not matter if volume goes up.
> The open question is long-term (>6yrs) durability1. Hyperscalers (Google, Microsoft, Amazon, and Meta) are aggressively consolidating AI demand to become the dominant consumers of AI accelerators; while developing competitive, highly-credible chip efforts.
Hyperscalers aren't the only players building large GPU farms. There are large foundation model companies doing it too, and there are also new clouds that offer compute outside of the hyperscaler offerings (CoreWeave, Lambda, and dozens of others). Granted, these may be a drop in the bucket and hyperscalers may still win this trend.
thot_experiment
Most media might be generated, but it remains to be seen whether most media that people will pay for will be generated.
ein0p
How can it be "slipping" if they sell out of all their stuff years in advance? I still can't find any sanely priced 5090s. And before you point out that 5090s are not their main revenue driver, they're sold out of H100s and so on years in advance, too.
crote
Same way they lost the crypo mining market.
They are losing their biggest customers to custom in-house silicon, and smaller orders are going to compete with a market being flooded by superfluous hardware from companies which either went bust due the the AI bubble shrinking, or went bust because they weren't able to compete with the big fish.
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adventured
The AI market will be drastically larger in 10-15 years, not smaller. The bubble aspects of the present will be trivial compared to the long-term result, as with the dotcom bubble. Google all by itself is worth more today than all the combined dotcoms in existence in 1999.
tintor
And how many 5090 were actually produced? It is easy to sell out with low volume production.
chneu
Consumer hardware is nothing for Nvidia. Gamers need to realize that, lol.
voidspark
The article is about HPC/AI where they are quickly becoming less competitive.
Gaming is only 7% of Nvidia's revenue.
mkoubaa
When takes like these go mainstream (Financial Times, etc) I buy.
null
Seems like another article based on the assumption that Nvidia just sits there doing nothing while everyone who has so far proven unable to compete suddenly figures it out and steals their lunch.
At some point one of these Nvidia doomers will be right but there is a long line of them who failed miserably.