Nations building their own AI models add to growing demand for Nvidia’s chips By Reuters

By Arsheeya Bajwa

(Reuters) – Nations building artificial intelligence models in their own languages ​​are turning to Nvidia (NASDAQ: ) chips, adding to already booming demand as generative AI takes center stage in business and government, an executive said on Wednesday executive.

Nvidia’s third-quarter forecast for growth in sales of chips powering AI technology, such as OpenAI’s ChatGPT, failed to meet investors’ wild expectations. But the company described new customers coming from around the world, including governments that are now looking for their own AI models and the hardware to support them.

Countries that adopt their own AI apps and models will contribute about double-digit billions to Nvidia’s revenue in the fiscal year ending in January 2025, Chief Financial Officer Colette Kress said on a call with analysts after Nvidia’s earnings report.

That’s up from a previous forecast that such sales would contribute single-digit billions to total revenue. Nvidia estimated total revenue of about $32.5 billion for the third quarter ended in October.

“Countries around the world (want) to have their own generative artificial intelligence that could incorporate their own language, incorporate their own culture, incorporate their own data into that country,” Kress said, describing the expertise and infrastructure AI as “national imperatives”. .”

She gave the example of Japan’s National Institute of Advanced Industrial Science and Technology, which is building an AI supercomputer with thousands of Nvidia H200 GPUs.

Governments are also turning to AI as a measure to strengthen national security.

“AI models are trained on data and for political entities – particularly nations – their data is secret and their models must be customized for their unique political, economic, cultural and scientific needs,” said Shane Rau, IDC’s computing semiconductor analyst.

“Therefore, they need to have their own AI models and a customized core hardware and software arrangement.”

Washington has tightened controls on exports of cutting-edge chips to China in 2023, seeking to prevent advances in AI that would help China’s military, hampering Nvidia sales in the region.

Companies have scrambled to take advantage of government efforts to build AI platforms in regional languages.

IBM (NYSE: ) said in May that Saudi Arabia’s Data and Artificial Intelligence Authority will train its Arabic language model “ALLaM” using the company’s Watsonx AI platform.

Nations looking to build their own AI models can drive growth opportunities for Nvidia GPUs, in addition to significant investment in enterprise hardware from big cloud providers like Microsoft (NASDAQ:) , said Bob O’Donnell, chief analyst at TECHnalysis Research.