As a result of OpenAI’s release of ChatGPT last year, especially the large number of AI developers that have sprung up, demand for servers with NVIDIA’s AI chips has skyrocketed across all industries, and these cloud providers are quickly realizing that their own arithmetic is no longer sufficient to meet the market’s needs.

In this delicate moment, NVIDIA naturally also found business opportunities.

According to the information, Nvidia last year to Amazon web services (Amazon web services, AWS) and other cloud computing service providers put forward an unusual proposal, and these enterprises have been Nvidia AI chip’s biggest buyers.

Simply put, NVIDIA wants to rent customers these servers with NVIDIA chips. This would allow it to sublease its customers’ servers to AI software developers, which naturally include some of the world’s biggest cloud developers.

As NVIDIA’s leverage grew, for example, with the new generation of H100 chips at its disposal, which happened to be the most pressing need of these cloud providers at the time, some of them had to bow down.

Microsoft, Google and Oracle all agreed to NVIDIA’s proposal, but AWS did not because it feared NVIDIA’s entry would threaten its position in the market, according to a person familiar with the decision.

Referring to its latest quarterly earnings report, NVIDIA reported revenue of $13.51 billion for the current fiscal quarter, up 88 percent from the previous quarter and 101% from the same period a year earlier.

After a blowout in May, NVIDIA has become the first semiconductor company ever to reach a market capitalization of $1 trillion. After that, investors have been looking for evidence that its fiscal second quarter will remain strong.

In March, NVIDIA CEO Jen-Hsun Huang announced a plan to open up supercomputers used to develop AI technologies like ChatGPT to commercial customers, allowing virtually any business to use the powerful but costly equipment on a cloud rental basis.

Of course, NVIDIA rent is not cheap, including eight A100 or H100 flagship chip prices of 37,000 U.S. dollars per month (currently about RMB 270,000). However, the opening of such supercomputers for a wider range of commercial customers will accelerate the development of artificial intelligence. The explosion of AI technology over the past period has already pushed NVIDIA shares up 77 % this year, with a market capitalization about five times that of longtime rival Intel.

Looking at Amazon AWS, the service provider didn’t get NVIDIA’s assistance until July of this year, when it launched a new Amazon Elastic Compute Cloud (EC2) P5 instance based on NVIDIA’s H100 Tensor Core GPUs. The service is described as allowing users to easily scale generative AI, high-performance computing (HPC) and other applications through a browser.

At NVIDIA’s previous annual developer conference, Jen-Hsun Huang said the company is working with partners such as Oracle to provide cloud access to NVIDIA’s DGX supercomputer. This supercomputer integrates up to 32,000 NVIDIA chips. The service allows anyone with a Web browser to log into the supercomputer.

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Compared with the 19% year-on-year growth in the previous quarter, the growth in this quarter slowed down, and the report said that the main factor was the increase in market size.

Breaking down cloud infrastructure vendors, the top three providers AWS, Microsoft Azure, and Google Cloud together grew 20%, accounting for 65% of total spending, down from 22% in the first quarter.
AWS

Both AWS and Microsoft saw growth decelerations, but Google Cloud’s growth rate remained steady at 31% compared to the previous quarter.

Amazon Web Services (AWS) continues to lead the cloud infrastructure services market in Q2 2023, accounting for 30% of total spending, up 12% year-over-year.

AWS growth has more than halved since this time last year. Faced with slowing revenue growth, AWS is aggressively increasing its investments in artificial intelligence.
Microsoft Azure

Microsoft Azure captured 26% of the market after growing 26% annually, positioning it as the second-largest cloud service provider in the second quarter of 2023.

Business performance is expected to remain stable given its cloud order book rose 19% to $224 billion in 2Q23.
Google

With 31% year-over-year growth in Q2 2023, Google Cloud is the strongest growth among the top three hyperscalers, capturing 9% of the cloud market share.

Google’s approach to extending the depreciation period for servers and network equipment helps control operating costs and improves Google Cloud’s profitability.

The report states that in the current business environment, where the focus is on cost containment, cloud providers must ensure a large influx of new customers and workloads to drive revenue growth.

The emergence of artificial intelligence technologies is introducing new cloud workloads and will drive huge demand for computing power, creating new opportunities for cloud growth.

refer to

 Global cloud services market growth slows to 16% in Q2 2023

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Amazon hopes to use this technology to promote its AI cloud services and catch up with competing products from industry rivals such as Microsoft and Google, so as to expand the attractiveness of its AWS business to enterprises and help AWS business development.

▲ Picture source Businesswire

The new AI Innovation Center will integrate consulting services, data scientists, engineers and solution architects to help customers in different industries leverage AWS’s machine learning capabilities and AI services to build enterprise solutions and reduce enterprise costs, Amazon said.

▲ Picture source Amazon

Amazon also said that the Innovation Center team can help customers use AWS generative AI services, including code writing assistant CodeWhisper, Bedrock (AI model platform) and other business tools that can help medical companies accelerate drug research, optimize process design and project processes for manufacturing, and give customers in the financial industry personalized financial advice and instant information.

Amazon’s AWS Generative AI service already has many participants, such as AI sales tool provider Highspot, travel company Lonely Planet, Ryanair Airlines and project management platform Twilio. Amazon’s current move is expected to further expand the reach of AWS relative to competing products. i

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Amazon previously issued an official announcement announcing that it has joined the competition for generative artificial intelligence technology. Amazon’s announcement was unusually vague, according to senior Amazon employees and customers. Typically, AWS launches product announcements with glowing customer testimonials from three to five customers, but this time it provided testimony from just one customer, document-editing startup Coda, these people said.

Coda CEO Shishir Mehrotra also said he would give Amazon an “incomplete” rating after testing the technology at AWS.

He has said that AWS’s generative AI tools are “in the early stages” and “they’re building on and repackaging existing services”. Still, he expects AWS’s AI tools to be competitive in the long run.

People familiar with AWS product launches are watching to see whether Amazon’s release of artificial intelligence tools is a way to counter cloud rivals Microsoft and Google and avoid being perceived as lagging behind. At present, both Microsoft and Google are using generative artificial intelligence technology to transform search engine services and add artificial intelligence capabilities to a series of products. Current generative artificial intelligence techniques are not precise enough and prone to errors, but there is no denying that this will revolutionize the computing industry.

Corey Quinn, chief cloud computing economist at Duckbill Group, a firm that advises AWS customers, spoke about what some people think about Amazon’s offerings. He said in an email that Amazon appears to be trying to sell customers on a product before it’s finished, which may never materialize.

Amazon’s generative artificial intelligence software is new, not old wine in new bottles, said Matt Wood, vice president of products at AWS. “With this product, we’ve let customers know what we’re doing and hope to invite some to try it out and provide feedback as we develop it,” he said. I strongly disagree with that perception. It’s not our style at all.”

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On Monday, local time, AWS announced that it will return more water to communities than it consumes in direct operations by 2030. The plan focuses on data centers in drought-prone regions such as California, South Africa, Indonesia and India, and measures include improving efficiency and recycling water from cooling systems.

Water is an essential resource for AWS operations, primarily for cooling data centers around the world. In the past two years, Amazon has been working on a project to reduce the amount of water used by AWS and increase the amount of water recycled by AWS.

U.S. media pointed out that data centers consume a lot of water and energy. It is often cheaper to spend money pumping water than to use electric cooling systems, but more electricity usually means more greenhouse gas emissions as well.

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