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‘Moore’s Law is dead,’ Nvidia CEO Jensen Huang says in justification for gaming card price hike

Nvidia Corp CEO Jensen Huang on Wednesday said he thinks it’s going to be “a pretty great Q4 for Ada,” the company’s next-generation chip architecture announced this week, right. even as critics resist raising prices while consumer demand falls. .

Nvidia
NVDA,
+0.65%

expect high demand for gaming chips using its next-generation “Ada Lovelace” chip architecture, named after the 19th century English mathematician often regarded as the world’s first computer programmer for her work on Charles Babbage’s Theoretical Analytical Engine.

The sales spike will be achieved in the current quarter when Nvidia’s $1,599 flagship RTX 4090 goes on sale on October 12, with other cards like the $899 mid-range 4080 following and the big” the launch took place at the end of January in the fourth fiscal quarter, Huang said.

Complaints spread online about the sudden price increase. For the respective chip, the 4090 costs 7% more than the 3090’s 2020 launch price it’s meant to replace. (For the 3090, the upgraded version of the original will cost $1,100 at Best buy $900 discount is advertised.) Even more remarkable, the 4080 costs 29% more than the 3080’s 2020 launch price.

Lovelace success Ampswas announced in May 2020, about two months after the COVID-19 pandemic, amid a surge in demand for gaming cards. Ampere-based gaming card introduced in September 2020.

Huang has certainly paid the price for that optimism in the form of two-quarters of a “really harsh dose” after the chipmaker slashed its outlook not only Once, or twicebut three times and say $400 million in sales now rising in the air because of the US ban from selling data center products to China and 1.22 billion dollars charged to remove Ampere-based inventory prior to the launch of Lovelace.

Read: Nvidia’s ‘China Syndrome’: Are Stocks Bearish?

“We are very, very specific, selling into the market a lot lower than what is being sold in the market, an amount that is significantly lower than what is being sold in the market,” Huang said. “And I expect that by the Q4 timeframe, that is, by Q4, the channel will normalize and it will have room for a great launch for Ada.”

As for critics, Huang said he feels the higher price tag is justified, especially because the advanced Lovelace architecture is needed to support Nvidia’s expansion into the so-called metaverse.

“A 12 inch one [silicon] The wafer is a lot more expensive today than it was yesterday, and it’s not a bit more expensive but a ton more expensive,” Huang said.

“Moore’s Law is dead,” Huang said, referring to the standard that the number of transistors on a chip doubles every two years. “And the ability of Moore’s Law to deliver twice the performance at the same cost, or at the same efficiency, half the cost, every year and a half, is exhausted. It’s all over, and unfortunately, the idea that a chip will depreciate in price over time, is a thing of the past. “

“Computers are not a matter of chips, but software and chips,” Huang said.

“Moore’s Law is dead… It’s completely over.”


– Nvidia CEO Jensen Huang

Nvidia continues to develop software

That’s why, over the years, Nvidia has developed a software ecosystem for its chip, which it prompted Some analysts are starting to see Nvidia as a rapidly emerging software company.

This time, Huang unveiled a major expansion of the company’s so-called metaverse platform with the Nvidia Omniverse Cloud, the company’s first Software as a Service and Infrastructure as a Service product, to design, publish, operate and experience the metaverse app.

Another push into SaaS is Nvidia’s big language model cloud AI services NeMo and BioNeMo. LLMs are machine learning algorithms that use large text-based data sets to recognize, predict, and generate human language. While NeMo is a general modeling service, BioNemo specializes in the application of LLM to biological and chemical research.

Realizing that Nvidia essentially offers an RTX 3080-gaming-chip-as-a-service with a reduced GeForce NOW Priority service in November, charging subscribers $99.99 for six months of chip performance gaming RTX 3080, MarketWatch asked Huang if he had ever foreseen using purchased, physical GPU hardware being replaced with cloud-based subscription services.

Read: Nvidia sales forecast down by about $1 billion, stocks fall

“I don’t think so,” Huang said. “There are customers who want to own, and there are customers who like to rent.”

“Some people would rather outsource the factory,” Huang said. “And remember, AI will become a factory, it will be the most important factory in the future.”

“A factory with raw materials and something will appear,” Huang said. “In the future, factories will have data coming in, and what comes out will be smart, models.”

Within factories, Nvidia must have options to serve customers of all sizes. “Startups want things in opex,” says Huang. “Large, established companies would rather have things in investments.”

Over the years, Nvidia has shown itself to be incapable of resisting change, going from that gaming chip company to the largest US chipmaker by market capitalization after designers Datacenters find Nvidia’s GPU or graphics processing units not only make video games look better, their parallel processors are useful in machine learning.

Some other technology hardware companies, such as Cisco Systems Inc.
CSCO,
-2.33%

and International Business Machines Corp.
IBM,
-1.08%
,
over the years and with varying degrees of protest and enthusiasm, almost transformed by necessity into software and services companies, as more and more businesses move their data to the cloud instead of keeping it on-premises in a proprietary server.

Read: The End of the One-Chip Question: Why Are Nvidia, Intel, and AMD’s Valuations Experiencing Huge Fluctuations

Of Nvidia’s 43 analysts, 31 have a buy rating, 11 have a hold rating, and one has a sell rating. Of those, 13 have lowered their price targets, resulting in an average target price of $202, down from $202.51 previously.

Shares closed Wednesday up 0.7% at $132.61, compared with a 1.7% drop for the S&P 500 index.
SPX,
-1.71%
.

Over the past year, Nvidia stock is down 55%, compared to a 36% drop in the PHLX Semiconductor Index
NUMBER X,
-0.97%
,
20% off by S&P 500
SPX,
-1.71%
,
and down 28% on the tech-heavy Nasdaq Composite Index
COMP,
-1.79%
.

For the Ampere series, Nvidia’s share price has fallen 4.7% since September 1, 2020, when Nvidia announced its RTX 3000 series Ampere-based gaming chips, compared with the S&P 500’s 9.3% gain. in that period of time.

FactSet / MarketWatch

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