The Pulse #59: NVIDIA's Massive Growth and the Generative AI Boom
Also: growth slowing at Adyen; McKinsey now selling developer productivity measurement; and why it’s so hard to build the “developer cloud.”
Today's topics are:
NVIDIA’s massive growth and the generative AI boom. The GPU chipmaker posted a monster revenue, and its data center business has tripled: in just 3 months. All major cloud providers are investing heavily to provide generative AI services. We are either at the start, or in the middle of the generative AI boom. Analysis.
Adyen: slowing growth across FinTech to come? The payments company — and competitor to Stripe — was valued at $52B before it released its latest earnings. A week later, the company is worth exactly half of this. The dramatic valuation drop happened thanks to slowing growth and lower profits. What could all this mean not just for Adyen, but for the FinTech industry? Analysis.
Is measuring developer productivity going mainstream? McKinsey advised close to 20 companies about improving their developer productivity and is now marketing its own developer productivity measurement approach. This indicates that more traditional companies are ready to pay for such measurements. Analysis.
Why is it so hard to build the “developer cloud”? Scott Kennedy worked for 11 years at Google and wrote about how outstanding Google’s internal developer cloud has been. But why has no one built a similar product outside of Google? Scott wrote a post on this – and why he joined Replit to tackle this challenge –, and I also followed up with some more questions. Exclusive.
New Relic warned to be wary of vendors bought by private equity. Then it was bought by one. The former observability market leader has been bought by Francisco Partners for $6.5B. Yet, only a few months ago, New Relic published a blog post warning it was risky to trust a competitor recently acquired by private equity firm, Francisco Partners! I look at the objections New Relic raised back then and how that warning applies to itself, today. Analysis.
1. NVIDIA’s massive growth and the generative AI boom
While Adyen is seeing slowing growth across its business, NVIDIA is experiencing exactly the opposite. The company reported the results from last quarter, and the results are incredibly impressive:
Data centers have invested incredible amounts into NVIDIA GPUs in just a few months. The most surprising part of NVIDIA’s earnings was that their data center business has grown 141% in just 3 months: from generating $4.2B in the previous quarter, to data center purchases being $10.3B.
This increase is nuts because it happened not over a year, but over 3 months. Here is what NVIDIA’s CFO, Colette Kress said at the press conference about the increase in data center spend:
“Data Center compute revenue nearly tripled year-on-year, driven primarily by accelerating demand from cloud service providers and large consumer Internet companies for HGX platform, the engine of generative AI and large language models. Major companies, including AWS, Google Cloud, Meta, Microsoft Azure and Oracle Cloud as well as a growing number of GPU cloud providers are deploying, in volume, HGX systems based on our Hopper and Ampere architecture Tensor Core GPUs.
There is tremendous demand for NVIDIA accelerated computing and AI platforms. Our supply partners have been exceptional in ramping capacity to support our needs.”
NVIDIA expects demand to keep up – and is investing in manufacturing more GPU units for their data center business. Also from their CFO:
“We expect supply to increase each quarter through next year. By geography, data center growth was strongest in the U.S. as customers direct their capital investments to AI and accelerated computing.”
We are seeing proof of just how much demand has exploded for generative AI applications and spend. NVIDIA is in a unique position in how its GPUs are the go-to choice for both data centers and enterprises that want to train large language models (LLMs) an deploy generative AI applications. Cloud providers respond to the demand they expect from customers in purchasing these GPU units: and so the increase in NVIDIA’s revenue shows that in the last 6 months, demand has gone through the roof.
NVIDIA is, clearly, profiting hugely from the AI boom. But what other companies will reap benefits – either in more revenue, more customers, or more growth? These ones are likely to: