Jensen Huang says he has found a ‘new’ $200B market cap for Nvidia

Nvidia founder and CEO Jensen Huang is, perhaps, one of the industry’s most well-known figures of all time when it comes to his company. He may surpass Salesforce’s Marc Benioff in terms of his company’s future prospects and earnings.

Even so, he speaks clearly, quarter to quarter.

Instead of warning you to look at the announcement that he has found “a new TAM of $ 200 billion for Nvidia” and doubt it, I would say that he believed him.

Huang put this new market boom at the feet of Nvidia’s new CPU chip, Vera, which was introduced. in March. Speaking on Wednesday’s earnings call — after Nvidia posted another record-breaking quarter with revenue of $81.6 billion and forecast $91 billion for the next — Huang positioned Vera as something that could turn things around. And one that already has sales figures.

But no matter how well Nvidia delivers, Wall Street is worried about what could knock Nvidia off its perch.

Recently, such fears have settled on the CPU. Nvidia is the king of GPUs, while historically the CPU market was dominated by companies such as Intel and AMD. (Nvidia has made CPUs in the past, of course, but that’s not its core business.)

For example, last month Amazon Web Services relied on the large contract it signed with Meta for millions of Amazon’s home AI CPUs. Amazon CEO Andy Jassy makes it clear that he thinks AWS can make AI chips, GPUs and CPUs, too. maybe better than Nvidia.

But now, with the Vera CPU, which is sold on its own and combined with its Rubin GPU, Huang believes he has opened a “big new driver” for his company because Vera believes, “the world’s first CPU, designed for effective AI,” Huang said on the call.

“Vera opens up a new $200 billion TAM for Nvidia, a market we’ve never discussed before, and every major hyperscaler and system manufacturer is joining us to use it.

He explained that while the “thinking” part of AI models uses GPUs, agents often run on CPUs. They use CPUs to perform assigned tasks and, predictably, run their own CPU-driven PCs.

Vera is for agents because it is designed to process tokens as quickly as possible. This contrasts with advanced cloud CPUs made up of “cores,” or the ability to run multiple applications as quickly as possible.

This sounds reasonable, but with major cloud providers and startups pursuing AI chip development, what makes him think that Nvidia is the source of performance CPUs?

Because, Huang says, Nvidia has already sold $20 billion worth of Vera CPUs this year and we’re only a few steps away.

“The world has billions of users, human users. My idea is that the world will have billions of agents, not today. I mean, we are growing in it, but we will have billions of agents, and all those billions will be using tools.

“We’re going to need more CPUs,” he said.