"No AI Spending Cuts"… Nvidia's Ultimate 'Blackwell' Is Coming

Big Tech Companies Still Committed to Expanding AI Investment
"Delaying Investment Is Riskier"
Jensen Huang: "Blackwell to Supply Samples This Week"

As the earnings reports of major big tech companies investing in artificial intelligence (AI) come to a close, concerns about AI investment are solidifying into confidence. With news that Nvidia has begun full-scale preparations for the launch of its next-generation GPU, 'Blackwell,' expectations are rising that domestic semiconductor companies will continue to benefit.

Jensen Huang, CEO of NVIDIA, is explaining Blackwell during his keynote speech at Computex 2024 in Taiwan last June. Photo by Jongmin Baek

After the earnings announcement on the 31st of last month (local time), Mark Zuckerberg, CEO of Meta, said during a Q&A with analysts, "Considering the long time it takes to acquire the capabilities needed for new inference projects, we want to take the risk of building the necessary capabilities in advance." This is interpreted as a commitment to proactively secure Nvidia's GPUs required for AI training and inference without hesitation in investment. Zuckerberg also said, "We are estimating the scale of data centers and computers needed in the future, but it is not easy."

Zuckerberg had previously indicated that Meta would purchase an additional 350,000 Nvidia GPUs by the end of this year. If this plan proceeds, Meta will secure a total of 600,000 Nvidia GPUs. Jensen Huang, CEO of Nvidia, recently mentioned in a conversation with Zuckerberg that Meta currently holds 600,000 Nvidia GPUs.

Zuckerberg's remarks are no different from those of Alphabet, Google's parent company, and Microsoft (MS), which also announced earnings earlier. All these companies recognize concerns about the profitability of AI investments but are not hesitating to make large-scale investments.

Sundar Pichai, CEO of Alphabet, said, "The risk of not investing is greater than the risk of investing," exemplifying the anxiety about falling behind in AI investment.

Although MS's Q2 cloud earnings fell short of expectations, impacting AI semiconductor companies' stock prices, a detailed look reveals that MS's capital expenditures increased by 75%, with an even higher growth rate expected next year.

Lisa Su, CEO of AMD, is explaining the 'MI350X' GPU, scheduled for release in 2025, at the Computex 2024 event held in Taiwan last June. Photo by Baek Jongmin

The situation of AMD, which announced earnings before Meta, also helped alleviate concerns about AI investment. Lisa Su, CEO of AMD, revealed that MI300 GPU quarterly sales surpassed $1 billion for the first time. She also raised the annual GPU sales forecast for this year from $4 billion to $4.5 billion.

Expectations for increased AI spending further boosted Nvidia's stock price. Nvidia's shares, which had sharply declined due to concerns about reduced AI investment and news that Apple used Google's chips for AI training, rose 12% during regular trading and an additional 3% in after-hours trading. Following AMD's earnings, Meta's positive results also had a consecutive positive impact.

Jill Lunia, software analyst at DA Davidson, evaluated, "MS's investment plan suggests that, for the time being, the benefits of MS shareholders will transfer to Nvidia shareholders."

Meanwhile, Jensen Huang, CEO of Nvidia, said that engineering samples of the latest Blackwell chips will be delivered to customers within this week, raising expectations for large-scale new demand. Blackwell is the latest product evolved from the Hopper architecture, which underpins the existing H100 and H200 chips. Its performance increases by about 30 times. The required HBM memory capacity also increases, which is why Nvidia needs memory not only from SK Hynix but also from Samsung Electronics.

Blackwell's price is also expected to soar. Investment bank Morgan Stanley estimated that the NVL36 server rack using 36 Blackwell chips will sell for about $2 million, and the NVL72 using 72 Blackwell chips will sell for $3 million. Jensen Huang confidently stated at the shareholders' meeting that Blackwell will be the most successful product in Nvidia's history. Blackwell is expected to be sold starting at the end of the year. Google has already announced that it will offer cloud services using Blackwell next year.