Nvidia (NVDA) has benefited from it since its software and GPUs are better at handling AI's high workloads than most business and cloud networks' CPUs.
The necessity to upgrade networks for AI demand has boosted Nvidia's sales and earnings. Sales of Nvidia's A100 and H200 AI processors rose 206% to $18.1 billion in the third quarter.
Revenue growth against fixed costs led to large profitability. Nvidia's Q3 earnings per share was $4.02, increasing 593% over the prior year.
Last year, the Department of Commerce restricted high-performance semiconductor sales to China to reduce risk.
Nvidia's stock plunged more than 17% last autumn due to concerns that it couldn't build a government-compliant replacement.
Nvidia has other challenges. The company also faces fresh competition from AMD. AMD CEO Lisa Su stated ambitions to build AI processors to fight Nvidia last year. MI300 chips began delivering this year, and demand is high.
In January's AMD fourth-quarter conference call, Su forecasted 73% annual growth in the AI-GPU industry to $400 billion by 2027. She also predicted AMD will sell $3.5 billion in GPUs to data centers this year, up from $2 billion.
Nvidia CEO Jensen Huang takes AMD's threat seriously. To retain Nvidia's AI market leadership, his team is building next-gen AI processors. They introduced AI chips for PCs in January to improve gaming and give AI locally rather than on the cloud. Nvidia wants to export a government-compliant processor to China in the second quarter.
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