Nvidia (NASDAQ:NVDA)’s Chief Executive Jensen Huang is pushing the company’s strategy to become a comprehensive provider of data center components, including software, networking technology, and design services, aiming to cement its position as a leader in the artificial intelligence (AI) sector, according to the Wall Street Journal.
This push comes amid a recent earnings report that saw Nvidia surpass Wall Street expectations and came shortly after competitor Advanced Micro Devices (NASDAQ:AMD) disclosed its near $5 billion acquisition of ZT Systems, a data-center design and manufacturing firm.
Nvidia is leveraging its dominance in the AI-chip market, where it holds over 80% market share, to offer a more integrated suite of products and services for what Huang refers to as “AI factories.”
These are the data centers that develop and run AI tools like OpenAI’s ChatGPT. Huang’s vision is to transform Nvidia from merely a hardware supplier to a one-stop shop for all crucial data center elements, according to the WSJ.
The company’s strategy involves capitalizing on its proprietary software, CUDA, which has been a cornerstone of its success for 17 years. CUDA allows developers to harness the power of Nvidia’s GPUs for computing tasks.
Moreover, Nvidia is investing in InfiniBand, a high-speed networking protocol that is widely used in AI training. Nvidia acquired Mellanox (NASDAQ:MLNX) Technologies, the leading equipment maker for InfiniBand, five years ago for close to $7 billion.
Nvidia is also venturing into AI-optimized Ethernet services, which are expected to generate significant revenue within the next year, according to Chief Financial Officer Colette Kress.
This service is part of Nvidia’s broader range of data center products, including central processors and networking chips designed to operate cohesively. The company is tailoring its offerings to meet the specific needs of various industries, such as healthcare and robotics, by providing specialized software and hardware setups.
