Nvidia CEO calls deal with Google 'a very big event' and contends ChatGPT and its ilk will accelerate demand

By Wallace Witkowski

In meeting with Wall Street analysts, Nvidia execs detail how they see their relationships with cloud providers and companies developing AI applications after unleashing a slew of new products aimed at the technology

Nvidia Corp. founder and Chief Executive Jensen Huang said his company's deal with Alphabet Inc.'s Google is a "very big event" that will serve to launch its own AI hardware and software products, helping others build out the technology.

In a meeting with investment analysts during Nvidia's (NVDA) annual GTC developer conference, Huang said that generative AIs like OpenAI's ChatGPT -- backed by a multibillion-dollar investment from Microsoft Corp. (MSFT) -- accelerates the demand for its platforms. Google (GOOGL)(GOOGL) launched its own version of the technology, Bard, on Tuesday, as Huang was detailing Nvidia's push to provide the picks and shovels for the AI movement.

Huang announced a slew of products and services during the conference's keynote presentation earlier Tuesday, targeted at expanding AI development, including new chips and platforms specifically targeted at generative AI applications as well as AI video and image creation.

For more:How Nvidia plans to fuel the AI surge and a new era of chipmaking

In the meeting with analysts, Huang explained to analysts how it will use those products and partner with cloud-service providers, also referred to as hyperscalers, to accelerate access and demand for its AI services. The CEO said its "biggest collaboration" is its partnership with Google Cloud Platform.

"Our partnership with GCP is a very big event," Huang told analysts, explaining that cloud-service providers are becoming AI factories, and that "every company is going to be an intelligence manufacturer," much like practically every manufactured consumer product carries a microchip. That way, AI and Nvidia's infrastructure-as-a-service is "going to expand our business model," Huang said.

Read: Nvidia launches new AI platforms, with Google Cloud as an early adopter

Huang said partnerships involve a cloud provider buying all the necessary hardware from Nvidia and others to support DGX Cloud, and then Nvidia "rents" the infrastructure from the provider, which hosts and maintains the system.

"We take the DGX Cloud services to market, and in combination of all the value we deliver, we would set the price, and engage the customers directly," Huang said, adding that if the partner wants to deal with customers directly "we're delighted by that" because the hardware and software still get sold.

Huang said such customers include those from the auto and healthcare industries, where there is a "great deal of urgency to take advantage of the latest generation of generative AI."

Software companies will also be leveraging the technology. Adobe Inc. (ADBE), at its own event Tuesday, announced an AI product named Firefly, a "co-pilot" tech aimed at helping create content within its own products that was also highlighted by Nvidia.

Read: Google opens up access to Bard AI chatbot, its rival to ChatGPT

Earlier in the month, Nvidia Chief Financial Officer Colette Kress told an investors conference that AI was at "an inflection point," not only with the growing popularity of models such as ChatGPT, but also as more businesses face cost pressures, the apps are being looked upon -- and marketed -- as efficiency tools.

Kress said Tuesday the company is "seeing stronger demand on hyperscale, and in the last month, more demand," adding that she was "confident we will be able to service" the AI market.

Nvidia shares gradually recovered from an initial loss over the session and finished the session up 1.2%, compared with a 1.3% gain on the S&P 500 index and a 1.6% advance on the tech-heavy Nasdaq Composite Index .

-Wallace Witkowski

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03-22-23 0817ET

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