Jim Keller, a well-known engineer who worked at AMD and Tesla and now leads the AI ​​company Tenstorrent, recently said something interesting about DemystifySci podcast. He believes that Nvidia is becoming like the IBM of old, but in the world of artificial intelligence. While this shows how strong Nvidia is right now in hardware AI, it also raises some concerns.

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Nvidia’s smart move to focus early on AI paid off big – its profits are over $26 billion in the first quarter of 2024. Are also one of the top three companies in the world based on market valuation, breathing down the neck of Microsoft and Apple.

The company is now a major player in the AI ​​hardware market, with its powerful GPUs used by tech giants like Microsoft, OpenAI and Meta. Looks like everyone is on Nvidia hype trainas CEO Jensen Huang calls AI the “next industrial revolution”, centered on Nvidia.

Keller, a highly accomplished engineer and entrepreneur, knows what he’s talking about. However, he may not realize how unfortunate his comment that “Nvidia is slowly becoming the IBM of the AI ​​age” is unfortunate.

In the early 1980s, IBM was huge in the personal computer market. Their computers were everywhere and saying “PC” often meant you were talking about an IBM machine. But IBM’s reign didn’t last long due to some basic mistakes and increasing competition.

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IBM’s strategy of using open architecture helped it dominate the market initially, but it also made it easier for other companies to build IBM-compatible computers. These competitors sold similar products at lower prices, which took away IBM’s market share.

The partnership between IBM and Microsoft also failed, as Bill Gates’ company retained the rights to sell its operating system (MS-DOS) to other companies, paving the way for the rise of Microsoft Windows.

As PC Gamer reports, as Windows became the dominant operating system, PCs became more associated with Microsoft than IBM. IBM’s slow adaptation to market changes and clinging to old business models allowed competitors to gain ground. By the 1990s, IBM’s PC business was struggling and in 2005, IBM sold its PC division to Lenovoleaving the personal computer market.

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Nvidia could face similar problems. As more companies start making AI hardware, Nvidia’s GPUs may become cheaper due to competition. Technology moves fast, so today’s best chips can be outdone quickly. As Nvidia continues to grow, it could face more competition and rules to follow, as IBM did.

Plus, there’s the $600 billion AI question. As analyst David Chan of Sequoia writes, there is a big gap between the money spent on AI infrastructure and the revenue that AI brings.

AI companies need to make around $600 billion a year to earn enough to cover these huge investments.

Chan said the gap was “only” $200 billion by September 2023. Even though Nvidia is making a lot of money, the rest of the AI ​​market isn’t growing fast enough.

Keller’s comparison to IBM is both a compliment and a warning, because Nvidia’s success now doesn’t guarantee its future. After all, the tech world is full of once-market-leading companies that haven’t kept up with change.

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this article “Nvidia is slowly becoming the IBM of the artificial intelligence era,” says the former AMD and Tesla engineer. Here’s the problem with this comparison originally appeared on Benzinga.com

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