Jensen Huang Discusses Nvidia's AI Chip Supply Challenge

Nvidia's Demand Surge: A Glimpse into the AI Giant's Future

by Faruk Imamovic
Jensen Huang Discusses Nvidia's AI Chip Supply Challenge
© Getty Images/Michael M. Santiago

Nvidia's CEO, Jensen Huang, faces a unique challenge: an insatiable demand for AI chips outpacing the company's ability to supply them. This issue underscores the significant role Nvidia plays in the rapidly expanding field of artificial intelligence (AI). In an exclusive interview with Yahoo Finance, Huang discussed the robust demand for Nvidia's products and the company's strategic transition from the Hopper AI platform to the advanced Blackwell system.

Unprecedented Demand Amid Transition

Despite some analysts' concerns about a potential dip in demand as Nvidia shifts from Hopper to Blackwell, Huang remains confident. "People want to deploy these data centers right now," he stated, emphasizing the immediate need for Nvidia's graphics processing units (GPUs). "They want to put our GPUs to work right now and start making money and start saving money. And so that demand is just so strong."

Huang's assertion is backed by tangible data: demand for Hopper has not only persisted but grown, even after the announcement of Blackwell. "Hopper demand grew throughout this quarter — after we announced Blackwell — and so that kind of tells you how much demand there is out there," he explained.

However, meeting this demand is no small feat. The complexity of Nvidia's chips, described by Huang as "the most complex computer the world's ever made," presents significant production challenges. "Every component, every part of our data center, is the most complex computer the world's ever made. And so it's sensible that almost everything is constrained."

Jensen Huang Discusses Nvidias AI Chip Supply Challenge
Jensen Huang Discusses Nvidias AI Chip Supply Challenge© Getty Images/Justin Sullivan

Financial Performance and Future Projections

Nvidia's financial performance in the first quarter of the fiscal year showcased its market dominance. The company reported adjusted earnings per share of $6.12 on revenue of $26 billion, marking a staggering 461% and 262% increase from the previous year, respectively. The non-GAAP operating income reached $18.1 billion.

Looking ahead, Nvidia projects its second-quarter revenue to hit $28 billion, plus or minus 2%, outpacing analysts' expectations of $26.6 billion. In a strategic move to appeal to investors, Nvidia also announced a 10-to-1 stock split, effective June 10, and an increase in its quarterly dividend from $0.04 to $0.10 per share. These announcements sent Nvidia's stock soaring, rising as much as 6% in extended trading on Wednesday.

Expanding Horizons Beyond Cloud Giants

Huang also addressed the evolving landscape of AI inferencing, where AI models are deployed for customer use after being trained. While there has been speculation about major cloud providers like Microsoft, Google, and Amazon potentially developing their own chips for inferencing, Huang is confident in Nvidia's position. "We have a great position in inference because inference is just a really complicated problem," he said, highlighting the complexity of the software stack and models involved.

Nvidia's reach extends beyond cloud service providers. Companies like Meta, Tesla, and various pharmaceutical firms are increasingly incorporating Nvidia chips into their operations. "Tesla is far ahead in self-driving cars," Huang noted. "But every single car, someday we will have to have autonomous capability."

The Race Towards Artificial General Intelligence

In parallel with Nvidia's advancements, the broader AI industry is on the brink of a major evolution: the development of artificial general intelligence (AGI). According to John Schulman, cofounder of OpenAI, AGI could be achieved within "two or three years." Schulman's remarks, made during a podcast with Dwarkesh Patel, have significant implications for the tech industry and society at large.

AGI refers to AI systems that can perform any intellectual task a human can, encompassing abilities like common sense and reasoning. While the potential benefits of AGI are immense, so are the risks. Experts warn that AGI could pose existential threats, such as the possibility of an AI takeover or widespread human job displacement.

ChatGPT© Getty Images/Leon Neal

The Need for Responsible Development

Schulman emphasized the necessity of collaboration and caution among tech companies to ensure AGI's safe development. "Everyone needs to agree on some reasonable limits to deployment or to further training, for this to work," he stated. The concern is that competitive pressures might lead companies to cut corners on safety to stay ahead in the race for AGI.

The call for caution echoes a broader sentiment in the AI community. Last year, figures like Elon Musk signed a letter advocating for a six-month pause on training AI systems more powerful than OpenAI's GPT-4. This pause, they argued, would provide time to develop safety protocols and mitigate risks.

Internal Shifts at OpenAI

Schulman's comments come amidst significant changes at OpenAI, where he now leads safety research efforts following the departure of Jan Leike. Leike, who previously headed the Superalignment team, resigned citing concerns that OpenAI was prioritizing product development over safety. The team has since been dissolved, with its remaining members integrated into OpenAI's core research team.

These developments highlight the tension between rapid AI advancements and the need for rigorous safety measures. Schulman advocates for preparedness to "pause either further training, or pause deployment, or avoiding certain types of training that we think might be riskier."