Exploring the Unprecedented Global Demand: Nvidia's H100 AI Chips Take the Market by Storm

Earlier this month, the global technology manufacturer reported revenue for the second quarter ended July 30, 2023, of $13.51 billion, with a surge of 101% from a year ago and up 88% from the previous quarter, resulting in an unprecedented surge in the share prices of the tech giant with an increase of 3.47% within the past five days.

The surge in this rally mainly resulted from the general growth of the Artificial Intelligence ("AI") sector, which has become so pervasive that not only private tech companies, but also various countries have placed advanced orders for the company's sought-after H100 AI processor chips. The waiting list includes nations such as the United Kingdom with Prime Minister Rishi Sunak committing £100 million of public money to maintain the country's competitiveness in the realm of AI. Other countries include Saudi Arabia, the United Arab Emirates and others. Moreover, there are reports showcasing that a substantial portion of Venture Capital funds possessing ample capital for GPU purchases have been actively acquiring these GPUs for their portfolio start-ups. This action aims to enhance the capabilities of their affiliated companies, prompting Nvidia to consider a threefold increase in its production to meet this unprecedented demand.

However, the notion of tripling the production might linger as an overly optimistic move due to the shortages in the supply chain. These shortages are not the biggest risk for established companies within the industry due to their deep pockets, market position and size but the same cannot be said for the start-ups. This situation demonstrates that challenging times are ahead for early-stage tech companies and their survival will be challenged once again as a consequence of the shortages. 

Responding to these concerns, Mustafa Suleyman, Nvidia's Chief Executive of Inflections, stated in an interview that the company intended to allocate at least 95% of the funds towards GPUs. This stance fosters an optimistic atmosphere for all stakeholders seeking to acquire the H100 chips, turning it into a matter of time for numerous entities aiming to capitalise on this surge. Only then can we evaluate the outcomes of this significant transformation in the technology sector and as always, time will tell.

Written By: Sukru Ege Karabiyik