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Nvidia's AI Leadership Pre-Earnings Gathers Momentum: What's Behind the Excitement?

Nvidia is tracking its first-quarter earnings and has yet to announce its results. The company has received many nods, both directly and indirectly, from mega-cap tech companies that are considered some of its biggest customers.

Terms like "AI Infrastructure," "generative AI," and "infrastructure capex" keep popping up in earnings calls from Microsoft, Alphabet, Amazon, and Meta Platforms, and all GPU chips mean more money is going on the incredibly popular Nvidia H100.

The Nvidia H100 GPU, which costs more than $40,000, provides AI technology that powers ChatGPT, Anthropic, and other generative AI platforms. The company is preparing to release the next AI chip called Blackwell later this year.

Elon Musk shouts out Nvidia’s AI chips. The most significant vote of confidence for Nvidia this earnings season came from Tesla CEO Elon Musk, who said on his company's earnings call that the electric carmaker will more than double its H100 GPU chips at the end of the year.

Musk said last month, "We've installed and ordered 35,000 H100 computers or GPUs, which means it works. "There are about 35,000 H100s in service, and we expect maybe 85,000 or so by the end of this year," Musk said H100s help Tesla further improve its Full Self-Driving software.

AI costs for mega-cap tech have skyrocketed. Meta Platforms said it had increased its projected capital expenditures for 2024 from $35 billion to $40 billion, from $37 billion previously. According to Meta, the growth is primarily driven by its "investments to support our AI roadmap."

Overall, Microsoft, Alphabet, Meta, and Amazon's combined capex is expected to reach $205 billion this year, representing a 40% increase from 2023 levels, according to UBS. A good portion of that amount may go to Nvidia for its H100. They will be streaming Blackwell Artificial Intelligence chips.

Nvidia has competition but still dominates

Nvidia's rival AMD's recent earnings suggest that most of its business is going to Nvidia and not its competitors. AMD said its MI300 AI chip will generate about $4 billion in revenue by 2024, which pales in comparison to Nvidia's more than $100 billion this year.

Meanwhile, Intel recently unveiled its Gaudy 3 AI chip to compete with Nvidia, but it said the chip is expected to sell for only $500 million this year. Investors will have to wait until after the market closes on May 22 to hear precisely what Nvidia’s earnings results are.

Conclusion: As NVIDIA continues to demonstrate its AI generative and solidify its position as a leader in the industry, expectations ahead of its earnings report reflect the increasing importance of AI in shaping the future of technology and business.