Nvidia Corp. Chief Executive Officer Jensen Huang said Wednesday that he thinks it will be “a pretty great Q4 for Ada,” the company’s next-generation chip architecture unveiled this week, even as critics resist a price rise during a reduction in consumer demand. .
Nvidia NVDA,
expects high demand for gaming chips using its next-generation “Ada Lovelace” chip architecture, named after a 19th-century English mathematician who is generally considered the world’s first computer programmer for his work on the Analytical Engine theorist of Charles Babbage.
A bit of sales are coming in the current quarter, as Nvidia’s $1,599 RTX 4090 goes on sale on October 12, with other cards like the $899 mid-level 4080 and the “vast majority” of the launch that will occur at the end of January. fiscal fourth quarter, Huang said.
Complaints circulated online about the unexpected price hike. For the respective chip class, the 4090 is priced 7% above the 2020 launch price of the 3090 it is meant to replace. (As for the 3090, an upgraded version of the original was $1,100 at Best Buy with an advertised price drop of $900.) Even more surprising, the 4080 is priced 29% above the launch price of the 2020 of the 3080.
Lovelace succeeds Ampere, which was introduced in May 2020, about two months into the COVID-19 pandemic, amid strong demand for playing cards. Ampere-based playing cards were introduced in September 2020.
Huang has certainly paid for that optimism in the form of two quarters of “really tough medicine” after the chipmaker cut its outlook not just once or twice, but three times and said that $400 million in sales are now up in the air due to a US ban on selling data center products in China and a $1.22 billion charge to clear Ampere-based inventory ahead of Lovelace’s launch.
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“We’re selling very, very specifically in the market much lower than what’s being sold off-market, a significant amount below what’s being sold off-market,” Huang said. “And I would expect that by the fourth quarter, sometime in the fourth quarter, the channel would have normalized and made room for a big launch for Ada.”
To critics, Huang said he believes the higher price is justified, especially since the cutting-edge Lovelace architecture is needed to support Nvidia’s expansion into the so-called metaverse.
“A 12-in [silicon] The wafer is much more expensive today than it was yesterday, and it’s not a little bit more expensive, it’s a lot more expensive,” Huang said.
“Moore’s law is dead,” Huang said, referring to the standard that the number of transistors on a chip doubles every two years. “And the ability of Moore’s Law to deliver twice the performance at the same cost, or at the same performance, half the cost, every year and a half, is over. It’s completely over, and unfortunately the idea that a chip will drop in cost over time is a thing of the past.
“Computing is not a chip problem, it’s a software and chip problem,” Huang said.
“ “Moore’s Law is dead… It’s completely over.”“
Nvidia continues to grow software
That’s why, over the years, Nvidia has developed such a deep-rooted software ecosystem for its chips that it’s led some analysts to start looking at Nvidia as a rapidly emerging software company.
This time, Huang unveiled a major expansion of the company’s so-called metaverse platform with Nvidia Omniverse Cloud, the company’s first software-as-a-service and infrastructure-as-a-service product, to design, publish, operate and experience. applications of the metaverse.
Another push into SaaS is Nvidia’s large language model cloud AI services NeMo and BioNeMo. LLMs are machine learning algorithms that use massive text-based datasets to recognize, predict, and generate human language. While NeMo is the general modeling service, BioNemo specializes in the application of LLM to biological and chemical research.
Seeing as Nvidia is essentially offering an RTX 3080 gaming chip as a service with its GeForce NOW Priority service that dropped in November, charging subscribers $99.99 for six months of RTX 3080 gaming chip performance, MarketWatch asked to Huang if he ever envisions the use of purchased physical GPU hardware being replaced by cloud-based subscription services.
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“I don’t think so,” Huang said. “There are customers who want to own and there are customers who like to rent.”
“Some people would prefer to outsource the factory,” Huang said. “And remember, artificial intelligence will be a factory, it will be the most important factory of the future.”
“Into a factory, raw materials go in and something comes out,” Huang said. “In the future, factories will have data, and what will come out of it will be intelligence, models.”
In terms of factories, Nvidia needs to be able to have options to serve all customers at scale. “Startups would rather have things in the opex,” Huang said. “Big, established companies would rather have things in capex.”
Over the years, Nvidia has proven itself to be impervious to transformation, growing from a gaming chip company to becoming the largest U.S. chip maker by market cap after design centers data found that Nvidia GPUs or graphics processing units did not. just make the most beautiful video games, their parallel processors were very useful in machine learning.
Several other technology hardware companies, such as Cisco Systems Inc. CSCO,
and International Business Machines Corp. IBM,
Over the years and with varying degrees of resistance and enthusiasm, they have morphed almost out of necessity into software and services companies, as more companies migrate their data to the cloud rather than keeping it on-premises on a proprietary server.
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Of the 43 analysts covering Nvidia, 31 have a buy rating, 11 have a hold rating and one has a sell rating. Of these, 13 cut their price targets, resulting in an average target price of $202, down from $202.51 previously.
Shares closed up 0.7% at $132.61 on Wednesday, compared with a 1.7% drop in the S&P 500 SPX.
For the year, Nvidia shares are down 55%, compared with a 36% drop in the PHLX Semiconductor Index SOX,
a 20% drop in the S&P 500 SPX,
and a 28% drop for the tech-heavy Nasdaq Composite Index COMP,
As for Ampere’s run, Nvidia’s share price has dropped 4.7% since September 1, 2020, when Nvidia unveiled its Ampere-based gaming chips from the RTX 3000, versus a 9.3% gain for the S&P 500 over that period.
FactSet/MarketWatch
