The explosion of generative artificial intelligence is like a gift that keeps on giving for chip designer Nvidia (NVDA.O), which opens a new tab.
Nvidia anticipates increased demand for its graphics processors as a result of new AI models that can produce video and have human-like voice interactions, following a spike in demand for the company’s products caused by Big Tech’s haste to launch chatbots.
“A lot of the information in life needs to be supported by physics and visuals. Thus, Nvidia CEO Jensen Huang told Reuters on Wednesday that “is the next big thing.”
“You have access to a tonne of material that you are learning from, along with 3D video. Thus, those systems will be fairly big.”
Demand for Nvidia’s Grace Hopper chips, such as the H200, which was originally utilized in OpenAI’s GPT-4o, a multimodal model capable of realistic speech dialogue with the capacity to interact across text and image, has increased due to the necessity for additional processing power to train and run complex AI systems.
Other Nvidia clients have also created AI picture or video generation platforms, such as Google DeepMind (GOOGL.O), which opens a new tab, and Meta Platforms (META.O), which opens a new tab.
After recording a five-fold increase in sales at its data center division in the first quarter, the chipmaker predicted quarterly revenue on Wednesday that was far higher than expected.
On Thursday, Nvidia surged 9% as the chipmaker’s impressive revenue prediction helped to boost stocks in the semiconductor industry as a whole.
According to Derren Nathan, head of equity analysis at Hargreaves Lansdown, “the large language models need to be increasingly multimodal, understanding not just video but also text, speech, 2D, and 3D images.” The demand is widespread.
Another significant factor driving demand for Nvidia chips is the emergence of AI video models for the automobile sector.
In an effort to pursue autonomous driving, Tesla (TSLA.O) has increased the number of processors in its AI training cluster to roughly 35,000 H100s, according to Nvidia’s finance head Colette Kress on a call following the company’s results on Wednesday.
According to Kress, Nvidia’s data center division is likely to have the top enterprise vertical this year being the automobile sector.
“It (video generation) is certainly one of the strong and already proven use cases for AI and it is extending beyond just content production,” Hargreaves Lansdown’s Nathan said.