Nvidia (NVDA) stock soared Thursday after the company reported fourth-quarter profit and revenue that beat Wall Street’s lofty expectations due to higher prices for data center graphics chips.
But CEO Jensen Huang isn’t just thinking about selling AI chips to companies. He is also considering selling it to entire countries as part of a concept known as Sovereign AI.
“Each region has a different language, knowledge, history and culture,” Huang said during Nvidia’s earnings call. “And they own their own data. They want to use that data, train it to create their own digital intelligence, and provision that raw material for their own use. ”
Sovereign AI boils down to allowing a single country or region to set up its own AI capabilities and allow that AI to meet its own needs.
“Aside from the US and China, sovereign AI is driving further demand,” said Nvidia CFO Colette Kress.
“Countries around the world are investing in AI infrastructure to build large-scale language models in their own languages based on domestic data and support local research and enterprise ecosystems,” she said. added.
Huang said Japan, Canada, France and many other regions have already built their own sovereign AI systems.
Of course, sovereign AI isn’t the only thing driving Nvidia’s sales. In fact, the company said more than half of its data center revenue comes from major cloud providers, accounting for $18.4 billion of its total revenue of $22.1 billion.
However, many of these large cloud providers are working on developing their own specialized AI chips that will prove to be more efficient in terms of performance and power compared to Nvidia’s chips. Amazon, Google, and Microsoft already have or are developing their own chips as a way to break away from their dependence on Nvidia.
But NVIDIA isn’t sitting idle on this challenge. According to Reuters, the company has reportedly reached out to three cloud providers to build custom chips.
However, Nvidia is not in dire straits at the moment. The semiconductor giant posted revenue of $27 billion in the fourth quarter, about the same as all of last year. And it expects even more revenue next quarter, with guidance calling for revenue of $24 billion, plus or minus 2%.
And there’s no telling how high NVIDIA could go if it could sell to entire countries the way it has been selling to Big Tech companies.
daniel howley I’m the technology editor at Yahoo Finance. He has been covering the technology industry since his 2011. You can follow him on Twitter. @Daniel Howley.
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