The Information

Greetings,

Nvidia CEO Jensen Huang is taking aggressive measures to avoid the downfall of other onetime hardware giants like Cisco and Sun Microsystems.

Huang won’t ship Nvidia’s artificial intelligence chips to customers unless they can certify they have enough data center space and will use the chips to generate revenue within a reasonable timeframe. Nvidia also has asked customers to buy proprietary server racks, which would make it harder for them to switch to alternative chips in the future. That led to a standoff with Microsoft, one of the top buyers of Nvidia chips.

Anissa Gardizy and Qianer Liu dive into Huang’s efforts to get ahead of the potential decline in demand for Nvidia’s chips, including by launching software and cloud services that compete with those of his customers. While his moves reflect a founder’s paranoia, they are part of a process that has already carried Nvidia to the top.

Enjoy,

Jessica Lessin
Founder & Editor-in-Chief

Nvidia’s Jensen Huang Is on Top of the World. So Why Is He Worried?

Around Christmas last year, Nvidia CEO Jensen Huang called a series of meetings with company executives to discuss a growing concern: whether Nvidia’s biggest customers were going to run out of data center space to install its artificial intelligence chips, which could hurt sales, according to someone who attended the meetings.

Huang told colleagues he was worried cloud server providers such as Amazon Web Services and Microsoft, which collectively have been buying about half of Nvidia’s AI server chips in recent quarters, weren’t moving fast enough to set up new data centers and power sources to accommodate the chips they had ordered, known as graphics processing units. After the meetings, Nvidia managers stepped up their pace of asking cloud providers whether they had enough space and electricity to accommodate their orders, according to an employee at Nvidia and several customers and data center operators.

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The major concerns facing market-leader Nvidia’s Jensen Huang