‘Moore’s Law’s dead,’ says Nvidia CEO Jensen as he justifies the price hike of gaming cards

‘Moore’s Law’s dead,’ says Nvidia CEO Jensen as he justifies the price hike of gaming cards

Nvidia Corp. Chief Executive Jensen Huang said Wednesday he thinks it will be “a great Q4 for Ada,” which unveiled the company’s next-generation chip architecture this week, even as critics grappled with a price hike with during a decline in consumer demand. .

Nvidia NVDA,
+0.65%
is anticipating high demand for gaming chips using its next-generation “Ada Lovelace” chip architecture, named after a 19th-century English mathematician who is generally considered to be the world’s first computer programmer for her work on Engine Charles Babbage’s analytical theory.

Sales numbers will hit a quarter as Nvidia’s flagship $1,599 RTX 4090 goes on sale on October 12, with other cards like the $899 mid-range 4080 to follow, with the “vast majority” of launches happening in January . fiscal fourth quarter, Huang said.

Complaints circulated online about the unexpected price hike. For the respective chip class, the 4090 is priced 7% above the 2020 launch price of the 3090 it is meant to replace. (As for the 3090, an upgraded version of the original was going for $1,100 at Best Buy in a $900 announced price reduction.) Even more impressive, the 4080 is priced 29% above the 3080’s 2020 launch price.

Lovelace succeeds Ampere, which was unveiled in May 2020, about two months into the COVID-19 pandemic, amid strong demand for gaming cards. Ampere-based gaming cards were introduced in September 2020.

Huang certainly paid off for that optimism in the form of two quarters of “very tough treatment” after the chipmaker cut its outlook not just once or twice, but three times and said it is now up to $400 million in sales. because of its US ban on selling data center products to China, and a $1.22 billion fee to clear Ampere-based inventory before Lovelace’s launch.

Read: Nvidia’s ‘China Syndrome’: Is the stock melting?

“We’re very, very specifically selling into the market much lower than what’s selling out of the market, a significant amount lower than what’s selling out of the market,” Huang said. “And I expect that by the Q4 time frame, sometime in Q4, the channel would have normalized, and made room for a great launch for Ada.”

To critics, Huang said he feels the higher price is justified, especially since Lovelace’s cutting-edge architecture is needed to support Nvidia’s so-called expansion into the metric.

“A 12-inch [silicon] A wafer is much more expensive today than it was yesterday, and it’s not a little bit more expensive, it’s a ton more expensive,” Huang said.

“Moore’s Law is dead,” Huang said, referring to the standard that the number of transistors on a chip doubles every two years. “And Moore’s Law has the ability to deliver twice the performance for the same cost, or the same performance, half the cost, every year and a half, approximately. It’s completely finished, so the idea that the cost of a chip will decrease over time is a thing of the past.”

“Computing is not a chip problem, it’s a software and chip problem,” Huang said.

“Moore’s Law is dead…it’s completely over.”


— Nvidia CEO Jensen Huang

Nvidia continues to grow software

That’s why, over the years, Nvidia has developed such a software ecosystem for its chips, that it has prompted some analysts to start seeing Nvidia as a rapidly evolving software company.

This time, Huang unveiled a major expansion of the company’s so-called metaverse platform with Nvidia Omniverse Cloud, the company’s first Software-as-a-Service and Infrastructure-as-a-Service product, to design, publish, operate and experience get. metaverse applications.

Another push into SaaS is Nvidia’s large-scale AI cloud services NeMo and BioNeMo. LLMs are machine learning algorithms that use massive text-based datasets to recognize, predict and generate human language. While NeMo is the exemplary general service, BioNemo specializes in the application of LLMs to biological and chemical research.

Seeing as Nvidia essentially offers an RTX 3080-gaming-chip-as-a-service with its GeForce NOW Priority service that dropped in November, charging subscribers $99.99 for six months of RTX 3080 gaming chip performance, for MarketWatch asked Huang if he ever expects the use of purchased physical GPU hardware to be replaced by cloud-based subscription services.

Read: Nvidia’s sales forecast falls about $1 billion short of expectations, the stock falls

“I don’t think so,” Huang said. “There are customers who want to own, and there are customers who want to rent.”

“Some people would prefer to outsource the factory,” Huang said. “And remember, artificial intelligence will be a factory, it will be the most important factory in the future.”

“Raw materials come into a factory, and something comes out,” Huang said. “In the future, the factories will have data coming in, and what comes out will be information models.”

As far as factories go, Nvidia needs to be able to have options to serve all customers at scale. “Startups would rather have things in opex,” Huang said. “Big established companies would rather have things in capex.”

Over the years, Nvidia has shown it’s not averse to transformation, going from that gaming chip company to becoming the largest US chip maker by market cap after data center designers realized that processing units weren’t Nvidia graphics, or GPUs. Make video games more interesting, their parallel processors have been very useful in machine learning.

Some other technology hardware companies, such as Cisco Systems Inc. CSCO,
-2.33%
and International Business Machines Corp. IBM,
-1.08%,
over the years and in varying degrees of resistance and enthusiasm, almost by necessity transformed into software and services companies, as more businesses move their data to the cloud rather than keeping it on-premises in a proprietary server.

Read: The end of single-chip wonders: Why Nvidia, Intel and AMD valuations are booming

Of the 43 analysts covering Nvidia, 31 have a buy rating, 11 have a hold rating, and one has a sell rating. Of those, 13 lowered their price targets, resulting in an average target price of $202, down from $202.51 previously.

Shares closed Wednesday up 0.7% at $132.61, compared with a 1.7% decline by the S&P 500 index SPX,
-1.71%.

For the year, Nvidia shares have fallen 55%, compared to a 36% drop according to the PHLX SOX Semiconductor Index,
-0.97%,
20% decline in the S&P 500 SPX index,
-1.71%,
and a 28% drop for the high-tech Nasdaq Composite COMP Index,
-1.79%.

As for the Ampere run, Nvidia’s stock price has declined 4.7% since September 1, 2020, when Nvidia unveiled its Ampere-based RTX 3000 series gaming chips, compared to a 9.3% gain by the S&P 500 over that period.

FactSet/MarketWatch

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