Former Google CEO Eric Schmidt sees Nvidia as a major AI developer: ‘You know what to do in the market’

Eric Schmidt, who was leading Google for ten years, he told Stanford students that, although he is not an investment adviser, he sees an obvious play in the stock market that does not include buying shares of his former employer.

Schmidt said, in a video posted by Stanford this week and later removed, that big tech companies are planning to make more and more investments. Nvidia– Artificial intelligence-based data centers, which could cost as much as $300 billion to build.

“I talk to the big companies, and the big companies tell me they need $20 billion, $50 billion, $100 billion – very hard,” said Schmidt, a adding that he is “close friends” with OpenAI CEO Sam Altman.

Schmidt suggested that most of the spending was going to Nvidia, which makes big data center AI chips, and has already seen revenue increase by more than 200% for three vertical sections. Google has introduced chips called Tensor Processing Units (TPUs), which can compete with Nvidia’s processors but are still very early.

“If the entire $300 billion goes to Nvidia, you know what to do in the market,” Schmidt said. “That’s not a product launch.” Schmidt did not say whether he owns Nvidia shares.

Schmidt, who was CEO of Google from 2001 to 2011 and remained in the position until 2019, was speaking to a group of undergraduates on the topic of AI. He told the Wall Street Journal that he asked for the video to be removed because he spoke negatively about Google’s work culture at the time.

But his clear words indicate the driving force behind Nvidia’s rise and the company’s central position in the AI ​​boom that began in late 2022.

As Nvidia sees rising demand from cloud companies and leading developers of AI models, Wall Street is questioning whether the chipmaker’s main customers are spending too much on infrastructure. of AI. Nvidia will provide the latest update to the market when it reports quarterly results in Aug. 28

Schmidt suggested Nvidia is not the only winner of AI, but there aren’t many other obvious options. He said that he now believes that large companies that can invest heavily in Nvidia chips and data centers will get a technological lead over smaller competitors who cannot use freely.

“Now, the gap between the border models – there are only three – and they all seem to be increasing,” Schmidt said. “Six months ago, I was sure that the gap was narrowing, so I invested a lot in small companies. Now I’m not sure.”

Measure CEO Mark Zuckerberg, whose company has purchased nearly 600,000 of Nvidia’s expensive GPUs, said earlier this month that the next-generation Meta model – in the Llama family – will require multiple iterations. about 10 times more computer power.

“And future models will continue to grow beyond that,” Zuckerberg said on the earnings call.

Altman, meanwhile, is reportedly working with OpenAI’s lead sponsor Microsoft to build a $100 billion data center for AI called “Stargate.”

“When Microsoft did the OpenAI deal, I thought that was the dumbest idea I’ve ever heard, to give your AI leadership to OpenAI and Sam and his team,” said Schmidt. However, they are on their way to becoming the most valuable company.

Schmidt said it will be difficult for competitors to catch up with Nvidia because many of the key open source tools that AI developers use are based on the company’s CUDA programming language. He said AMD’s software that translates Nvidia’s CUDA code for its chips “hasn’t worked yet.”

Schmidt, who started the company Innovation Endeavors in 2010, still owns about 147 million shares of Alphabet, according to Bloomberg, worth about $24 billion. In addition to startup investing, he has been a philanthropist and has advised several government committees on technology.

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