Written by Stephen Nellis and Arsheeya Bajwa
(Reuters) – For semiconductor design company Nvidia, the boom in generative artificial intelligence is a gift that keeps on coming.
Riding the surge in demand caused by big tech companies rushing to adopt chatbots, Nvidia is hoping that new AI models that can create videos and interact with human-like voices will further boost orders for its graphics processors.
“You need video and physics-based information in your life. That's the next big thing,” Nvidia CEO Jensen Hwang told Reuters on Wednesday.
“There's 3D video and there's a ton of things to learn from it. So those systems are going to be very large.”
The need for more computing power to train and run advanced AI systems is driving demand for Nvidia's Grace Hopper chips, such as the H200, which was first used in OpenAI's GPT-4o, a multimodal model capable of lifelike voice conversations with the ability to interact between text and images.
Other Nvidia customers, including Google DeepMind and Meta Platforms, have also released AI image and video generation platforms.
The company on Wednesday forecast much stronger-than-expected quarterly revenue after its data-center division posted more than five-fold sales growth in the first quarter.
“Demand is broad and large language models are becoming increasingly multi-modal and need to understand not just video but text, speech, 2D and 3D images,” said Darren Nathan, head of equity analysis at Hargreaves Lansdown.
AI models for video used in the automotive industry have also emerged as a major driver of demand for Nvidia chips.
Tesla has expanded its fleet of H100 processors for training AI to about 35,000 as it works to power self-driving cars, Nvidia Chief Financial Officer Colette Kress said in a conference call after the company's earnings release on Wednesday.
Kress added that the automotive industry is expected to be Nvidia's largest business segment for data center business this year.
“(Video generation) is certainly one of the powerful and proven use cases for AI, and it's expanding beyond just content creation,” said Hargreaves Lansdown's Nathan.
(Reporting by Arsheeya Bajwa in Bengaluru and Stephen Nellis in San Francisco; Writing by Aditya Soni; Editing by Anil D'Silva)
