- Nvidia’s AI chips are in high demand as nations build customised AI models to reflect their unique languages and cultures.
- Despite not meeting investor expectations in its latest results, Nvidia is reporting significant growth from government contracts for AI technology.
OUR TAKE
Nvidia, a top player in the AI chip market, is seeing a big increase in demand as countries around the world invest a lot in developing AI models that are tailored to their own languages and cultures. While Nvidia’s recent earnings report didn’t quite meet the sky-high expectations set by investors, the company is seeing a lot of growth in new markets, including government sectors that are building their own AI infrastructure. This shows that more and more countries are realising the importance of AI technology for their economies and security. Personally, I think this not only makes Nvidia a stronger player in tech, but also shows how important AI is on the world stage.
–Heidi Luo, BTW reporter
What happened
Nvidia has announced a surge in demand for its AI chips, driven by countries building custom AI models in their native languages and for their specific cultural contexts.
However, this surge in demand was accompanied by a third-quarter revenue forecast that didn’t meet investors’ high expectations, sparking mixed reactions in the financial markets.
Despite the initial disappointment, Nvidia described an influx of new customers worldwide, including numerous government contracts to develop their own AI technologies.
According to Nvidia’s chief financial officer Colette Kress during a post-earnings call with analysts, the company now expects these government projects to contribute low double-digit billions to its revenue in the fiscal year ending January 2025.
This is an increase from previous guidance of high single-digit billions. In particular, Kress highlighted the wider adoption of AI applications tailored to specific national languages and cultural needs as a significant revenue driver
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Why it’s important
This was further illustrated by a project in Japan, where the National Institute of Advanced Industrial Science and Technology is building an AI supercomputer using thousands of Nvidia H200 GPUs.
The strategic deployment of AI technology by national governments underscores the growing recognition of AI’s potential. “AI models are trained on data. For political entities, their data is secret and their models need to be customised. Therefore, they need their own AI models and a custom arrangement of hardware and software,” said IDC computing semiconductors analyst Shane Rau.
Top tech analysts, including Bob O’Donnell of TECHnalysis Research, argue that this demand will lead to significant growth for Nvidia, alongside continued investment from major cloud providers such as Microsoft.
