NVIDIA’s Nightmare

PLUS: OpenAI's New Funding Round

Author

AI For All
August 30, 2024

In partnership with

Hello readers,

Welcome to another edition of This Week in the Future! NVIDIA held its Q2 earnings call, and the results were encouraging for many. Plus, OpenAI will raise billions in a new fundraising round. Did NVIDIA and OpenAI silence the skeptics? Let’s find out!

NVIDIA’s Nightmare

In today’s growth-obsessed economy, the number must always go up. All eyes were on NVIDIA during its Q2 earnings call where CEO Jensen Huang disclosed the numbers: $16.6 billion in net income and $30 billion in revenue, a 122% increase from Q2 of last year. Did NVIDIA silence the skeptics and prove that the generative AI boom will only continue? Well, investors weren’t so easily convinced. NVIDIA’s stock fell 6% in after-hours trading on Wednesday. Why did this happen?

For one, NVIDIA’s new flagship AI chip, Blackwell, is delayed, which has caused investors to doubt that NVIDIA can reach its lofty revenue goals. Furthermore, during the earnings call, Goldman Sachs analyst Toshiya Hari reminded everyone of the AI bubble by asking Jensen Huang point blank about generative AI’s return on investment (or lack thereof) for NVIDIA’s customers and its customers’ customers and what that means long-term. To be honest, Huang gave a long non-answer full of platitudes.

NVIDIA isn’t the only company thinking about money. OpenAI intends to raise billions in a new funding round led by Thrive Capital. Apple and NVIDIA are in talks to join. Some have taken this as a sign that all is well at OpenAI, but this is actually a red flag. OpenAI is not profitable and needs another cash infusion to keep the lights on. Given the exorbitant costs of generative AI, how long before they need more cash? How long will Big Tech bankroll these glorified R&D departments if generative AI plateaus?

Our Take

NVIDIA will probably make billions from their Blackwell chips because tech companies want to see if more powerful and efficient hardware will lead to better AI capabilities while reducing costs. NVIDIA’s nightmare would be having to go back to being a gaming-focused company if the demand for AI chips wanes *shudder*.

As for OpenAI, it seems a company doesn’t need to be profitable, it just needs to show growth. OpenAI can keep raising money for as long as they can project a veneer of progress (aided by a credulous tech media). At least, that’s the pessimistic take. We all want better technology to improve the world. Will these companies be able to truly deliver? In OpenAI’s case, we may find out soon.

🔥 Rapid Fire

Power your competitive advantage with intelligent automation from ELEKS

ELEKS' intelligent automation service transforms your business operations through data-driven solutions. We automate complex tasks, streamlining processes to increase productivity and reduce operational costs. Our tailored solutions adapt to your changing needs and help you unlock new growth opportunities by freeing your team to focus on high-value tasks.

The result? Enhanced customer satisfaction, improved client retention, and a stronger market position.

📖 What We’re Reading

The Challenges of Generative AI in Identity Management

“Generative AI has been the topic of conversation ever since OpenAI thrust it into the mainstream. In fact, there are few industries not feeling significant shifts from the technology. One area experiencing this first-hand is identity management. This is the cornerstone of security and compliance at every organization. And while there’s big potential for GenAI transformation, there are several key challenges that smart leaders should keep in mind.”

Source: AI For All

💻️ AI Tools and Platforms

  • Tonic → Synthetic data for AI developers

  • Ducky → AI for customer support teams

  • Sierra → Conversational AI for your customers

  • Layerpath → Interactive product demos with AI

  • Notable → AI platform for healthcare operations