Nvidia demand rests on three segments, not two AI labs

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 1:02:01

   So, first of all, particularly, I mean, NVIDIA represents, call it 80% of the revenue share of AI infrastructure in the world today. And so, my description of the universe of computing, NVIDIA computing matters here. They really basically call it three segments, three large segments. It's probably slightly more than that. But let me just kind of categorize it in three lower segments. The first segment of our computing is just baseline computing, just meaning used for data processing, molecular dynamics, physics simulation, fusion simulation, fission simulation, you name it, right?

2. 1:02:40

   Quantum chemistry, quantum physics, and so everything. Right. Okay? The world of simulation and data processing, not to mention computer graphics. And so all of that processing done on our GPUs, if you just kind of said there was no AI at all, just classical machine learning, XGBoost at Visa, MasterCard for fraud detection, recommender systems to figure out what news to recommend to you, just all of that stuff combined, classical computing, not AI, not deep learning, not agentic systems, I'm going to call it a third of our business.

3. 1:03:14

   And that business is growing, call it 30%, 40% per year. In the absence of any AI labs, NVIDIA is not zero, right? We're quite a large company. So that's number one. The second part is the AI labs, people see two, but we work with every one of them. And MetaMuse is doing fantastic, right? Incredible. And it's vastly NVIDIA. And there were zero last year or a year before that. It was just recommender systems.

4. 1:03:48

   And now they're killing it with Metamuse. And of course, Grock didn't exist three years ago. We didn't run Gemini before. We run Gemini now. And starting this year, we started working with Anthropic. And so if you just kind of look at our compute, people see a couple of labs, but I see more than that. I see five, six labs. Okay. And so these labs are all doing great. Correct. And if you told me that that represents not quite one third of our business, let's say a quarter of our compute, fantastic.

5. 1:04:26

   Okay. So let's say that's a quarter. So when people are looking at NVIDIA, and we now run the infrastructure of the world, and I just said 25% of it, maybe 30% of it, is the frontier labs. Call it a third is just processing in general. And another third, this is the part that's really great. Because we're at the beginning of a new computing platform shift, just a vast number of new startups are coming out.

6. 1:04:58

   So many great companies. And some of them are, of course, doing consumer stuff. One of them really doing great, Noah Instinct. I was just going to mention that. Noah's doing great. To all kinds of physical AI, biological AI, material sciences AI. Jeff Bezos, this new company, Prometheus. They're doing fantastic. And so the number of companies across the spectrum of industries that have been started, thousands of them.

7. 1:05:27

   And what do they do? They rent NVIDIA computers. So they're renters. And so what is a third of our business is kind of cloud computing for the next generation. It's kind of like AWS for today, you know? And so it's just not AWS for the future. And that represents about a third of our business altogether. My sense is that we're in the early innings of the build-out of this new computing architecture.

8. 1:05:57

   And it's a real big mistake to recognize just a couple of companies and think that they were funding the infrastructure. And then one observation, open models.