Nvidia founder and CEO Jensen Huang is renowned for his optimistic outlook on his company’s future, often being compared to Salesforce’s Marc Benioff. Despite the hype, Huang consistently delivers results each quarter.
Instead of skepticism about Huang’s claim of discovering a “brand new $200 billion TAM for Nvidia,” it seems he has earned some trust. This substantial new market centers around Nvidia’s latest CPU product, Vera, launched in March. During Wednesday’s earnings call, following Nvidia’s record-breaking quarter of $81.6 billion revenue and a projection of $91 billion for the next, Huang highlighted Vera’s potential and its impressive sales numbers.
However, Wall Street remains anxious about potential challenges to Nvidia’s dominance. Recently, concerns have shifted towards the CPU sector. While Nvidia leads in GPUs, the CPU market has historically belonged to companies like Intel and AMD. Nvidia has ventured into CPUs before, but it wasn’t their main focus.
For instance, Amazon Web Services recently announced a significant contract with Meta for Amazon’s AI CPUs. Amazon CEO Andy Jassy has expressed confidence in AWS’s capability to produce AI chips, both GPUs and CPUs, potentially rivaling Nvidia.
With the introduction of the Vera CPU, available separately or packaged with the Rubin GPU, Huang sees a “major new growth driver” for Nvidia. He claims Vera is the “world’s first CPU, purpose-built for agentic AI,” believing it opens a “new $200 billion TAM” for the company. According to him, every major hyperscaler and system maker is collaborating with Nvidia for deployment as the world shifts towards computing structures for agentic AI and robotic physical AI, with Nvidia at the forefront.
He pointed out that while AI models’ “thinking” aspect uses GPUs, CPUs are pivotal for agents performing tasks and could eventually operate their CPU-driven PCs.
Vera’s design focuses on processing tokens rapidly, unlike traditional cloud architecture CPUs optimized for running multiple applications swiftly. Despite cloud providers and startups prioritizing AI chip development, Huang is confident in Nvidia’s position due to $20 billion in standalone Vera CPU sales this year alone.
With a global user base and a prediction of billions of agents using tools akin to PCs, Huang foresees a significant demand increase for CPUs.
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