Breaking Down the AI Race: More Than Just Nvidia’s Chips
Artificial intelligence will define the winners of the next decade.
Currently, Nvidia is viewed as the winner – the company added $227 billion to its market cap following its fourth fiscal quarter earnings. Nvidia accounts for over a quarter of the S&P 500’s increase year-to-date.
The media wants you to believe it’s because Nvidia has a monopoly on artificial intelligence chips. But that’s really not the case.
There are plenty of companies that can make artificial intelligence chips:
- Google spent $2-3 billion to make 1 million AI chips
- Amazon spent $200 million to make 100,000 AI chips
- Microsoft signed a $15 billion deal with Intel to make AI chips they can use
In comparison, Nvidia sold 2.5 million chips in 2023, per The New York Times.
The bottleneck to artificial intelligence is not a chip problem. It’s a computing problem.
How you create software with artificial intelligence fundamentally differs from the web and mobile eras of the recent past. In the past, computing was based on a retrieval model – you touch your phone, which sends electrons to a data center to retrieve your file and surface it back to you on your interface.
In the future, the vast majority of computing will be a retrieval + generation model.
In an interview with the New York Times, Jensen Huang, CEO of Nvidia, shared, “Every aspect of the computer has fundamentally changed, and so everything from the networking to the switching to the way the computers are designed to the chips itself – all the software that sits on top of it and the methodology that pulls it all together. It’s a complete reinvention of the computer industry.”
Nvidia has a 15-year head start, having been focused on building specialized computers, data centers, computing services, and other software tools - an ecosystem around the chips to become a one-stop-shop for artificial intelligence.
Chips are just one piece of a much larger infrastructure challenge that companies like Microsoft and Meta must build to compete with Nvidia in artificial intelligence, starting with retooling the $1 trillion global data center market.
