Countries developing their own AI models are boosting Nvidia’s growing chip demand
By Arsheeya Bajwa
(Reuters) – Countries developing artificial intelligence models in their own languages are increasingly turning to Nvidia chips, fueling already booming demand as generative AI becomes more of a focus for businesses and governments, a senior executive said on Wednesday.
Nvidia’s third-quarter forecast for increased sales of its chips that power AI technologies such as OpenAI’s ChatGPT fell short of investors’ high expectations. However, the company reported new customers from around the world, including governments that are now looking to develop their own AI models and the hardware to support them.
Countries that introduce their own AI applications and models will contribute approximately a low double-digit billion amount to Nvidia’s revenue in the fiscal year ending January 2025, Chief Financial Officer Colette Kress said in a conference call with analysts following the release of Nvidia’s earnings report.
That’s more than the previous forecast that such sales would add a high single-digit billion amount to total revenue. Nvidia forecast total revenue of around $32.5 billion for the third quarter ending in October.
“Countries around the world (desire) to have their own generative AI that would be able to integrate their own language, their own culture, their own data into their respective country,” Kress said, calling AI expertise and infrastructure “national needs.”
She cited as an example the Japanese National Institute of Advanced Industrial Science and Technology, which is building an AI supercomputer with thousands of Nvidia H200 graphics processors.
Governments are also using AI as a measure to strengthen national security.
“AI models are trained on data, and for political entities – especially nations – the data is secret and their models must be customized to their individual political, economic, cultural and scientific needs,” said Shane Rau, computer and semiconductor analyst at IDC.
“Therefore, they must have their own AI models and a tailored underlying arrangement of hardware and software.”
Washington tightened controls on the export of cutting-edge chips to China in 2023 to prevent breakthroughs in artificial intelligence that would help China’s military, hampering Nvidia’s sales in the region.
Companies are trying to capitalize on government efforts to develop AI platforms in regional languages.
IBM announced in May that Saudi Arabia’s Data and Artificial Intelligence Authority would train its Arabic language model, ALLaM, using the company’s AI platform Watsonx.
Countries looking to develop their own AI models can create growth opportunities for Nvidia’s GPUs – in addition to significant investments in the company’s hardware by major cloud providers like Microsoft, says Bob O’Donnell, principal analyst at TECHnalysis Research.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Peter Henderson and Jamie Freed)
