Tomasz Tunguz - NVIDIA
Tomasz TunguzVenture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. NVIDIA
NVIDIA’s growth is an index on the growth of AI. “Compute revenue grew more than 5x and networking revenue more than 3x from last year.” Data center revenue totaled $26b, with about 45% from the major clouds ($13b). These clouds announced they were spending $40b in capex to build out data centers, implying NVIDIA is capturing very roughly 33% of the total capex budgets for their cloud customers.
NVIDIA has started to highlight the return-on-investment (ROI) for cloud providers. As the prices for GPUs increases, so do NVIDIA’s profits, to a staggering degree - nearly 10x in dollar terms in 2 years. Is this a problem for the clouds?
That may not matter to GPU buyers - at least not yet - because of the unit economics. Today, $1 spent on GPUs produces $5 of revenue.
But soon it, it will generate $7 of revenue. Amazon Web Services operates at a 38% operating margin. If these numbers hold, newer chips should improve cloud GPU profits - assuming the efficiency gains are not competed away.
And this trend should continue with the next generation architecture, Blackwell.
We can also guesstimate the value of some of these customers. DGX H100s cost about $400-450k as of this writing. With 8 GPUs for each DGX, that means Tesla acquired about $1.75b worth of NVIDIA hardware assuming they bought, not rented, the machines.
In a parallel hypothetical, Meta would have spent $1.2b to train Llama 3. But the company plans to have buy 350,000 H100s by the end of 2024 implying about $20b of hardware purchases.
As these costs skyrocket, it wouldn’t be surprising for governments to subsidize these systems just as they have subsidized other kinds of advanced technology, like fusion or quantum computing. Or spend on them as a part of national defense.
There are two workloads in AI : training the models & running queries against them (inference). Today training is 60% and inference is 40%. One intuition is that inference should become the vast majority of the market over time as model performance asymptotes. However it’s unclear if that will happen primarily because of the massive increase of training costs. Anthropic has said models could cost $100b to train in 2 years.
The trend shows no sign of abating. Neither do the profits!
|
Older messages
Chatting With Her - The ChatGPT App on Mac
Monday, May 20, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Chatting With Her - The ChatGPT App on Mac For the past few
AI Spending Patterns : It's Not What You Think
Friday, May 17, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. AI Spending Patterns : It's Not What You Think Ramp
BI's Third Form : Office Hours with Benn Stancil
Friday, May 17, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. BI's Third Form : Office Hours with Benn Stancil On
Are AI Companies Valued Differently Than Non-AI Companies?
Tuesday, May 14, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Are AI Companies Valued Differently Than Non-AI Companies? The
A Series of Unfortunate Decisions
Friday, May 10, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. A Series of Unfortunate Decisions When a person asks a
You Might Also Like
This tiny project turned into a $14M/year saas
Sunday, June 16, 2024
Starter Story's Sunday Breakfast #97 ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Hard-won lessons building 0 to 1 inside Atlassian | Tanguy Crusson (Head of Jira Product Discovery)
Sunday, June 16, 2024
Tanguy Crusson reveals hard-won lessons on building products at Atlassian, from HipChat to Jira Product Discovery, and much more. ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
[Replay] Find & Validate Your Product Idea
Sunday, June 16, 2024
Free challenge replay for only 24 hours You're receiving this email because you signed up for the Find & Validate Your Ecomm Product Idea Challenge. - you asked, we answered: We recorded the
🧃 Cashing in on the indie hacker gold rush + a solo brainstorm
Saturday, June 15, 2024
2 new episodes of the Startup Ideas Podcast to get your creative juices flowing
What’s 🔥 in Enterprise IT/VC #398
Saturday, June 15, 2024
The 5 Ps of Inception Investing + outworking your competition from Tom Brady & Roger Federer ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
📄 $6.8M ARR - Simple Blogging Tool
Saturday, June 15, 2024
+ How to never build something nobody wants.. ever again...
🗞 What's New: How to create good content
Saturday, June 15, 2024
Also: War room wisdom for founders!
🗞 What's New: How to create good content
Saturday, June 15, 2024
Also: War room wisdom for founders!
The challenge was just the beginning. Your invite inside 👀
Saturday, June 15, 2024
Applications now OPEN >>> You're receiving this email because you signed up for the Find & Validate Your Ecomm Product Idea Challenge. , First of all, thank you so much to all 6500 of
🚀 Virgin Galactic Hits Pause
Saturday, June 15, 2024
Plus Rocket Lab's $23.9M CHIPS funding, Redwire to provide solar arrays to Thales Alenia, and more! The latest space investing news and updates. View this email in your browser The Space Scoop Week