“Moore’s law is dead,” says Nvidia CEO Jensen Huang in justifying the increase in the price of playing cards.

Nvidia Corp. CEO Jensen Huang on Wednesday said he thinks it will be “a really great fourth quarter for Ada,” the company’s next-generation chip architecture unveiled this week, even though critics are against a hike. prices during a weakening of consumer demand.

Nvidia NVDA,
+ 0.65%
predicts a high demand for gaming chips utilizing its next-generation “Ada Lovelace” chip architecture, named after 19th-century English mathematics generally regarded as the world’s first computer programmer for her work on the theoretical analytical engine by Charles Babbage.

A smattering of sales will hit the current quarter as Nvidia’s $ 1,599 flagship RTX 4090 goes on sale Oct. 18, 12, with more cards like the $ 899 mid-range 4080 to follow and the “vast majority” of the launch that will occur in the fiscal fourth quarter of late January, Huang said.

Complaints have been circulating online about the unexpected price increase. For the respective chip class, the 4090 is priced 7% higher than the 2020 launch price of the 3090 it is supposed to replace. (As for the 3090, an updated version of the original cost $ 1,100 at Best Buy with an advertised price drop of $ 900.) More surprisingly, the 4080 is priced 29% higher than the 2020 launch price of the 3080.

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

Huang definitely paid for that optimism in the form of two-quarters of “really tough medicine” after the chip maker cut his prospects not just once, or twice, but three times and said $ 400 million in sales are. now in the air due to a US ban on selling data center products to China and a $ 1.22 billion charge to clear Ampere-based inventory ahead of Lovelace’s launch.

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“We are selling into the market very, very specifically, much lower than what it is selling out of the market, a significant amount less than what it is selling out of the market,” Huang said. “And I hope that by the fourth quarter, sometime in the fourth quarter, the channel would normalize and make room for a big launch for Ada.”

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

“A 12 inch [silicon] wafers are a lot more expensive today than they were yesterday, and they’re not a bit more expensive, they’re a ton more, ”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 the ability of Moore’s Law to deliver twice the performance for the same cost, or the same performance, half the cost, every year and a half, is over. It’s completely gone, so the idea that a chip will go down in cost over time, unfortunately, is a thing of the past. “

“Computing isn’t a chip problem, it’s a software and chip problem,” Huang said.

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

– Jensen Huang, CEO of Nvidia

Nvidia continues to cultivate software

That’s why, over the years, Nvidia has developed such an ingrained software ecosystem for its chips, that it has prompted some analysts to start viewing Nvidia as an emerging software company.

This time around, 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, use and experiment with metaverse applications.

Another push towards SaaS is Nvidia’s NeMo and BioNeMo cloud artificial intelligence services. LLMs are machine learning algorithms that use huge text-based data sets to recognize, predict and generate human language. While NeMo is the general model service, BioNemo specializes in the application of LLM to biological and chemical research.

Seeing that Nvidia essentially offers an RTX 3080 gaming chip as a service with its GeForce NOW Priority service dropped in November, charging subscribers $ 99.99 for six months of RTX 3080 gaming chip performance, MarketWatch asked Huang if it expects. never use of purchased physical GPU hardware replaced by cloud-based subscription services.

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

“A factory brings in raw materials and something goes out,” Huang said. “In the future, factories will receive data in and what comes out will be intelligence, models.”

As for the factories, Nvidia must be able to have options to serve all customers on a large scale. “Startups would rather have things in Opex,” Huang said. “Big established companies would prefer to have things in capex.”

Over the years, Nvidia has proven not to be resistant to transformation, moving from that gaming chip company to becoming the largest US chip maker by market capitalization after data center designers discovered that processing units Nvidia’s graphics, or GPUs, weren’t just doing this to make games look better, their parallel processors were very useful in machine learning.

Several other technology hardware companies, such as Cisco Systems Inc. CSCO,
and International Business Machines Corp. IBM,
have, over the years and with varying degrees of resilience and enthusiasm, virtually transformed by necessity into software and service companies, as more and more companies migrate their data to the cloud rather than keeping it on-premise on a proprietary server.

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

Shares closed Wednesday up 0.7% at $ 132.61, versus a 1.7% decline in the S&P 500 SPX Index,

Over the year, Nvidia shares were down 55%, compared to a 36% drop in the PHLX Semiconductor Index SOX,
a 20% decline in the S&P 500 SPX Index,
and a 28% drop for the high-tech Nasdaq Composite Index COMP,

As for the Ampere run, Nvidia’s share price has fallen 4.7% since September. 1, 2020, when Nvidia unveiled its RTX 3000 series Ampere-based gaming chips, versus a 9.3% gain on the S&P 500 during that time.

FactSet / MarketWatch


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