What you need to know
- Despite Microsoft and OpenAI's vast resources and talent, former Google CEO Eric Schmidt says NVIDIA will win the AI race.
- The CEO attributes his predictions to the high demand for GPUs by Microsoft and OpenAI from NVIDIA to facilitate their AI projects.
- Microsoft and OpenAI have reportedly invested $100 billion in a project dubbed Stargate to free themselves from an overreliance on NVIDIA for AI chips.
Every major tech corporation is racing to hop onto the AI bandwagon. While companies like Microsoft, OpenAI, and Google have enjoyed relative success in the category, former Google boss Eric Schmidt recently indicated that NVIDIA might be the biggest winner in the AI race (via CNBC).
Interestingly, Schmidt indicated that Google missed its opportunity with AI due to its work-from-home policy, giving startups like OpenAI and Anthropic a competitive edge. "And the reason the startups work is because the people work like hell," added Schmidt.
Gmail developer Paul Buchheit echoed similar sentiments but pointed at Alphabet's reorg of the company that placed CEO Sundar Pichai at the helm. The company's founders seemingly took a backseat, bringing their AI ambitions to a halt as the company focused on maintaining its dominance in search.
Despite Microsoft's early and heavy investment in OpenAI, Schmidt says NVIDIA has the upper hand in the AI race. The former CEO says most tech companies venturing into the new category heavily rely on NVIDIA for AI chips.
“I’m talking to the big companies, and the big companies are telling me they need $20 billion, $50 billion, $100 billion — very very hard,” explained Schmidt. With this in mind, it's apparent that most of the resources allocated to AI projects by these tech corporations are channeled to NVIDIA for AI chips.
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While the stock market is shaky at best, NVIDIA's market valuation has seen a significant bump, pushing the chip maker to become the world's most valuable company ahead of Apple and Microsoft with a market cap of $3.335 trillion. Last year, NVIDIA was listed as the world's most profitable chip brand, with Microsoft and Meta as its A-list clients.
According to Google's erstwhile CEO:
"If $300 billion is all going to Nvidia, you know what to do in the stock market. That’s not a stock recommendation."
Schmidt says NVIDIA won't be the only company reaping heavily from investing in AI. The chip maker will share the limelight with other key players in the industry. Based on his speculations, major tech corporations that can invest in NVIDIA and its data centers will be well-positioned to win in the AI race.
Admittedly, Microsoft and OpenAI's partnership is complicated, but Schmidt says:
“When Microsoft did the OpenAI deal, I thought that was the stupidest idea I’d ever heard, outsourcing essentially your AI leadership to OpenAI and Sam and his team. And yet, they’re on their way to being the most valuable company.”
This happened after investors started raising concerns over Microsoft's heavy investment in AI projects with little return on profits.
Is Stargate the way out for Microsoft and OpenAI?
Earlier this year, Microsoft and OpenAI invested over $100 billion to free themselves from the shackles and overreliance on NVIDIA for AI chips. The project dubbed Stargate is a data center designed to help support both companies' AI advances by meeting their high demand for GPUs.
According to reports, Stargate should launch in 2028. However, projections indicate that 30% of AI projects will be abandoned by 2028 after proof of concept, and there's a growing concern about the technology's exorbitant water and power demands.
