Nvidia Revenue Explodes to Over $25 Billion
The chart below shows Nvidia quarterly revenues rising to over $25 billion, a more than five-fold increase since the start of 2024. This explosion in revenue is not unique to Nvidia, as other tech companies like Google and Microsoft are keenly observing these numbers and reevaluating their forecasts.
The Dawn of Artificial Superintelligence
As Leopold Aschenbrenner, a leading expert, notes in his essays The Decade Ahead, mainstream pundits are struggling to come to terms with the profound implications of artificial superintelligence. This is an era when machines surpass human cognitive intelligence, and their abilities will far surpass our own.
Nvidia, however, has a head start, with its high-gross-margin AI chips controlling over 70% of the AI chip market. Google has its Tensor Processing Units, while Intel and Advanced Micro Devices are working to capture a share of the rapidly growing AI chip market.
The AI chip market is expected to reach $400 billion in annual sales by the end of the decade, with plenty of new entrants offering bespoke chips for specific tasks.
The Power Constraint
However, the growth of AI will be constrained by power consumption. US power generation has only increased 5% in the last decade, but the possibility of a 100-gigawatt AI cluster will consume about 20% of all US electricity.
To satisfy the power needs of this emerging industry, companies may have to invest in power generation or buy aluminium smelters for their power contracts. Clean energy is preferable, but a Trump administration may prioritize US domination of the AI race by tapping into abundant natural gas reserves.
The dangers of falling behind in AI, at a state level, are enormous. Superintelligence can be weaponised, and rogue states could use it to threaten annihilation or sabotage competing nation states.
Aschenbrenner argues that the US must win this race, lest AGI supremacy is forfeited to dictatorships. South Africa, however, is nowhere in this race, and the huge power needs of the AI industry will not be satisfied in a country that has struggled to keep lights on for most of the last decade.
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Source: Best Investing
The Rush to AI Supremacy
Microsoft is already generating $5 billion in incremental AI revenue, and OpenAI doubled its revenue to $2 billion over the six months to February 2024. If this rate of doubling continues, it should reach $10 billion by early 2025.
Microsoft, Google, and Meta will likely invest heavily in AI, and their revenues will skyrocket as AI becomes a dominant driver of growth.
The future of the AI industry is shrouded in uncertainty, but one thing is clear: the rush to AI supremacy has begun, and it will have far-reaching consequences for the economy, national security, and the future of humanity.
