Nvidia rides the GenAI megatrend

Nvidia rides the GenAI megatrend

It feels a bit like Intel and AMD are fighting over scraps, while Nvidia continues to dominate sales

The US$27-billion chipmaker, Nvidia is one of the biggest gainers of the Generative Artificial Intelligence (GenAI) megatrend sweeping the world, posing serious challenge to rivals AMD (revenue US$23.6 billion) and Intel (revenue US$63 billion). Per analysts, GenAI could add demand generally for $10 billion to $15 billion worth of graphics chips, or GPUs (graphic processing units), over the next year or two. They expect Nvidia’s annual revenue to top $46 billion in three years, which implies an annual growth rate averaging 20% – a notable pace for a chip maker at Nvidia’s scale.

82% market share to Nvidia

A surprising new report shows Intel is now neck and neck with AMD when it comes to graphics card market share – a seemingly remarkable achievement considering Intel has only recently started producing discrete consumer GPUs. The report, from of PC market research company JPR, notes that both AMD and Intel are on 9% of the GPU market – while market leader Nvidia is way ahead of both at a huge 82% of the market.It feels a bit like Intel and AMD are fighting over scraps, while Nvidia continues to dominate sales.

Not to be left behind Intel has taken a different route to right the GenAI megatrend. It is focusing on addressing the deepfake risks that GenAI would no doubt unleash. Intel claims that its FakeCatcher, the core of the system, can detect fake videos with a 96% accuracy rate, enabling users to distinguish between real and fake content in real time.

Intel focuses on responsible generators

Its other approach is through what it brands as ‘responsible generators.’ As opposed to creating images by training on real people’s faces, this generator mixes and matches regions (nose of person A, mouth of person B, eyes of person C, etc.) to create an entirely new face that does not already exist in a data set.

Meanwhile, Nvidia’s share price has more than doubled over the past six months. That makes it the best performing stock in the entire S&P 500 in that time. The chip maker’s market value has now surpassed that of Tesla and Facebook-parent Meta Platforms and is close to eclipsing Berkshire Hathaway– all much larger companies in terms of annual revenue. Bernstein Research also rates Nvidia as one of the most crowded stocks in the chip sector, and one of only two to remain in the most crowded decile over the past two months.

The bulk of Nvidia’s gains have come in the past three months, as the public launch of the AI-powered chatbot called ChatGPT in late November sparked a new wave of enthusiasm for so-called generative AI, and how it could revolutionize services like internet search, product design, writing and programming. The new technology requires intense computing power in data centres, where Nvidia has already built up a large-and-growing business for its graphics processors and software designed for AI applications. The company made a slew of announcements recently as part of its annual GTC developers conference that focused mostly on the generative AI opportunities.

The high capital intensity of GenAI workloads, particularly on the training side, is now a major part of the calculus for the largest companies in technology. Nvidia is taking the lead here, as the company has dominance in the training market that is likely to persist for several years.

New Nvidia products dominate the market

Nvidia flexed its muscles recently when it launched a half-dozen new RTX Ada Lovelace architecture GPUs designed specifically for laptops and desktops. Bob Pette, vice president of professional visualization at Nvidia, specifically linked these new products to the intense demands of AI and metaverse applications.

“Running data-intensive applications like generative AI and real-time digital twins in the metaverse requires advanced computing power,” Pette observed. Thus, the new Nvidia RTX GPUs “provide the horsepower” that today’s “creators, designers and engineers” need.Clearly, Nvidia is jumping headfirst into the AI game with its new GPU architecture. Nvidia’s new RTX desktop and laptop GPUs featuring Ada architecture technology provide “up to 2x faster AI training performance of the previous generation,” as well as “new levels of realism and interactivity for real-time graphics by multiplying performance with AI.”

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