Therese Poletti
Fast-growing sovereign AI business expected to generate billions of dollars in revenue this year, up from zero last year
Just when some investors thought Nvidia had no further upside, the semiconductor giant announced it was building a multibillion-dollar new business seemingly from scratch.
Nvidia (NVDA) Chief Financial Officer Colette Kress told analysts on Wednesday’s earnings call, already packed with records and high-end announcements, after the chip maker beat Wall Street expectations. , spoke about sovereign AI, a rapidly growing new field.
“Data center revenues continue to diversify as countries around the world invest in sovereign AI,” Kress said. “Sovereign AI refers to the ability of nation states to create artificial intelligence using their own infrastructure, data, workforce and business networks.”
She said many countries around the world are building domestic computing capacity through various models. Some countries are working with state-owned carriers and utility companies to procure and operate sovereign AI clouds, while others are working with local cloud partners to provide a shared AI computing platform available to the public and private sectors. Some countries are sponsoring it.
One example Kress mentioned is Swisscom Group, which is majority-owned by the Swiss government. The company recently announced that its Italian subsidiary will build Italy’s first and most powerful Nvidia-powered supercomputer and develop the first large-scale language model natively trained in Italian, she said.
“We expect national AI revenue to approach billions of dollars this year, going from zero last year,” Kress said. “The importance of AI is attracting the attention of all countries.”
It’s unclear whether Sovereign AI will continue as part of its data center business, or whether Nvidia plans to eventually spin it off into its own segment. However, segment reporting typically begins when a division is deemed important to the company. At least for now, even his single-digit $1 billion in revenue represents only a modest increase for Nvidia. The company reported first-quarter revenue of $26 billion.
The Sovereign AI business was another positive boost for the chipmaker in an already impressive quarter. The company also decided to increase its dividend and conduct a major 10-for-1 stock split to make its stock more affordable for both employees and investors.
There was little to complain about in the quarter, other than rising operating expenses due to an expansion of its employee base and its own data centers. Wall Street cheered, investors rushed to buy up more shares, and Nvidia’s momentum shows no signs of slowing.
-Therese Poletti
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05-22-24 1952ET
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