Microsoft’s chief technology officer, Kevin Scott, revealed on Wednesday that the company is experiencing greater accessibility to Nvidia’s chips for artificial intelligence workloads compared to a few months ago.
Speaking at Vox Media’s Code Conference, Scott explained that the market for Nvidia’s graphics processing units (GPUs) is starting to open up. The demand for these GPUs has surged since the launch of the Microsoft-backed OpenAI’s ChatGPT chatbot last year.
Scott stated, “The demand for GPU capacity was surpassing the supply that the entire ecosystem could generate. However, this issue is gradually resolving. While the supply is still tight, it is improving week by week, and we have more positive news ahead.”
Similar to Google and other tech giants, Microsoft has been incorporating generative AI into its products and selling its capabilities to clients. However, training and deploying AI models have predominantly relied on Nvidia’s GPUs, leading to a scarcity in supply.
According to Nvidia, the company anticipates a 170% revenue growth quarter-on-quarter from the previous year. Its gross margin has increased from 44% to 70%, and Nvidia’s stock price has risen by 190% in 2023, surpassing all other S&P 500 members.
In an interview with The Verge’s Nilay Patel, Scott had previously mentioned his role in managing Microsoft’s GPU budget, describing it as a challenging task. However, Scott noted that the situation has improved since their last conversation, as generative AI technologies have become more established and gained public attention.
Nvidia has announced plans to ramp up its supply with each passing quarter until next year, as stated by finance chief Colette Kress on the recent earnings call.
Meanwhile, Similarweb reported a decline in traffic to ChatGPT for three consecutive months. Microsoft provides Azure cloud-computing services to OpenAI and is preparing to offer Microsoft 365 Copilot access to large organizations in November.
When asked about media reports regarding Microsoft’s custom AI chip, Scott remained noncommittal but emphasized the company’s extensive work in developing its own silicon. Microsoft has previously collaborated with Qualcomm on an Arm-based chip for Surface PCs.
Scott declared, “We have made significant investments in silicon over the years, and we ensure that we make the best choices in building our systems with the available options. And over the past few years, Nvidia has been the best option.”
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