Episode 231, this episode aired on September 09, 2024
Analyst(s): Daniel Newman, Patrick Moorhead
Document #: SF231DNPM202409
From the ongoing antitrust investigations into NVIDIA to major updates from Intel and Broadcom to the rise of AI-powered hardware, Daniel Newman and Patrick Moorhead explore the complexities of today’s tech landscape in the latest episode of The Six Five Podcast, with a strong focus on AI, semiconductors, and the ever-evolving tech market.
What Are Covered in This Episode:
- The NVIDIA Antitrust Probe: A Boiling Point in the AI Arms Race?
- Intel’s New Chips: Lunar Lake Takes Center Stage
- Broadcom’s Earnings: The Power of a Well-Diversified Business Model
- Qualcomm: A Growing Threat to Intel and AMD?
- Final Thoughts: A Rapidly Evolving Tech Landscape
Access the video link of the September 09, 2024 Six Five Episode here.
The NVIDIA Antitrust Probe: A Boiling Point in the AI Arms Race?
NVIDIA continues to dominate headlines, not just for its cutting-edge AI innovations but also for its market practices, which have caught the eye of regulators. The Department of Justice (DOJ) has launched an antitrust probe into NVIDIA’s massive dominance in the AI semiconductor space, holding more than 90% of the market for data center GPUs.
While holding a monopoly is legal, it’s illegal to leverage that power to stifle competition or harm consumers. NVIDIA’s alleged market practices, such as exclusionary rebates and preferential treatment for customers who purchase bundles of NVIDIA products, could fall under this scrutiny. However, investors seem relatively unfazed by the investigation because these probes can take years—sometimes over a decade—to produce meaningful results. The duo reminds us that antitrust cases in the tech world tend to move slowly, citing examples such as Microsoft and Intel, where legal battles dragged on for over a decade.
Despite the legal woes, NVIDIA’s command over the AI market will not likely diminish in the short term. Jensen Huang, CEO of NVIDIA, has positioned the company to remain at the forefront of AI despite these investigations. Moorhead and Newman agree that the DOJ investigation could slow NVIDIA down by forcing more legal oversight into internal meetings. Still, ultimately, this is unlikely to stop the company’s momentum in AI innovation.
Intel’s New Chips: Lunar Lake Takes Center Stage
Switching gears, Intel’s much-anticipated Lunar Lake chip launch. Intel’s breakthrough product is a significant milestone as it tries to re-establish its foothold in the competitive semiconductor market. Intel’s CEO, Pat Gelsinger, has been under pressure to deliver meaningful progress, and Lunar Lake could represent a step in the right direction.
Intel’s Lunar Lake chips boast impressive specifications, particularly regarding single-threaded performance and battery life. Emphasizing the importance of the 20-hour battery life claims could make Intel chips much more competitive, especially in the face of growing competition from Apple and Qualcomm. Although it initially sounds great, it’s expected to be cautiously optimistic since Intel needs to back up these bold claims with third-party verification once the chips hit the market.
There’s also a focus on Intel’s ability to regain credibility in the AI race, particularly its inclusion of AI acceleration capabilities in Lunar Lake. Introducing embedded memory and better integration with AI workloads could allow Intel to compete more aggressively in the rapidly growing AI-powered PC market.
However, Intel still faces challenges, particularly regarding multi-threaded workloads, where competitors like Qualcomm and AMD currently have the upper hand. But, if Intel can deliver on its battery life promises, it could regain some lost ground in the consumer PC market.
Broadcom’s Earnings: The Power of a Well-Diversified Business Model
Broadcom posted substantial numbers despite what the market initially perceived as a slightly underwhelming revenue guide. Broadcom’s success can be attributed to three main factors: the growth of AI-related revenues, the accelerating performance of VMware post-acquisition, and the stabilization of non-AI semiconductor revenues. AI-related products, including custom accelerators and networking products, saw massive growth, with some segments experiencing 3-5x year-over-year increases.
Broadcom is now the second-largest player in the AI hardware space after NVIDIA, and its strategy of focusing on custom AI solutions, such as XPUs and networking fabric, positions the company well for future growth. Despite concerns about the broader economy, Broadcom continues to benefit from its diverse portfolio, which spans everything from AI semiconductors to enterprise software, thanks to the VMware acquisition.
The VMware segment, in particular, was a point of emphasis. VMware bookings are up 32%, with Broadcom CEO Hock Tan reiterating that the company is on track to deliver $8.5 billion in EBITDA by fiscal 2025, well ahead of schedule. Broadcom’s ability to extract value from its acquisitions and disciplined approach to cost management has made it a standout performer in the tech sector.
Qualcomm: A Growing Threat to Intel and AMD?
Qualcomm has been making waves in the PC market with its AI PC processors, and it’s clear that Qualcomm is gearing up for a head-to-head competition with Intel and AMD.
Qualcomm’s approach is disruptive as they’re going after the mid-market with their new eight-core AI PC processor, which is set to power $799 AI PCs. This price point will allow Qualcomm to target a much larger volume of the PC market, which could put significant pressure on both Intel and AMD.
Qualcomm delivers competitive performance but also for doing so in a power-efficient manner. Qualcomm’s AI acceleration capabilities and strong battery life make it a formidable player in the AI PC space. Qualcomm’s aggressive approach will lead to even more competition in the AI-powered PC market, benefiting consumers with better performance and lower prices.
Final Thoughts: A Rapidly Evolving Tech Landscape
The tech industry is entering a new phase of rapid innovation, driven primarily by AI and semiconductors. NVIDIA’s legal challenges aside, the company is still the undisputed leader in AI hardware. Still, companies such as Broadcom, Intel, and Qualcomm are all making significant strides to compete in this lucrative market.
Broadcom’s solid earnings and focus on AI-powered semiconductors show it’s ready to compete with NVIDIA for enterprise and cloud AI workloads. Meanwhile, Intel’s Lunar Lake chips could help the company regain its footing in the consumer PC market, provided it can deliver on its ambitious promises. Qualcomm, for its part, is making waves with affordable, power-efficient AI PC processors that could upend the traditional CPU market dominated by Intel and AMD.
The future of tech is unfolding rapidly, and as Newman and Moorhead point out, the next few years will be pivotal for companies in the semiconductor space. Whether it’s AI, antitrust probes, or new chip launches, one thing is sure: the race to innovate is far from over.
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Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
Talking Special Guest, NVIDIA, VMware Explore, Salesforce, Dell, Pure Storage, HP
Talking Synopsys, NVIDIA, Broadcom, AI GPU & ASIC Market, Microsoft, Downward Job Revision
Talking AMD, ZT Systems, Google, Cisco, Lenovo, HPE & Morpheus Data, Huawei & NVIDIA, Coherent
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
Six Five Media is a joint venture of two top-ranked analyst firms, The Futurum Group and Moor Insights & Strategy. Six Five provides high-quality, insightful, and credible analyses of the tech landscape in video format. Our team of analysts sit with the world’s most respected leaders and professionals to discuss all things technology with a focus on digital transformation and innovation.
