On this episode of The Six Five Webcast, hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The handpicked topics for this week are:
- HPE Discover 2024
- Apple Halt On Vision Pro?
- Pure Storage Accelerate 2024
- The 3 Trillion Battle – World’s Most Valuable Companies
- Dell Tech x.AI Ai Deal
- Copilot + PCs Ship
For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.
Watch the episode here:
Listen to the episode on your favorite streaming platform:
Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.
Transcript:
Daniel Newman: Hey, everybody. Welcome back to another episode of The Six Five Podcast. Daniel Newman here back in the chair. This room doesn’t look familiar, if you’re watching this on video, it’s because I’m not in my normal spot. But then again, Pat, has there been a normal spot for the last, I don’t know, 22 weeks? It’s felt like we’ve been on the road, on the road, on the road, on the road, but guess what? Next week, no travel that I’m aware of yet. Nothing’s come up. I’m going to be home all week long. Couldn’t be happier. How are you doing, my friend?
Patrick Moorhead: Bet you it’s great to be back in the seat. We were gone all week Monday through Thursday, hitting Discover, hitting Pure Storage Accelerate. I am glad to be back. I got a great night’s sleep. Didn’t sleep too well in Las Vegas. It’s really important to get that circadian rhythm anytime you get out of that. And yeah, I need to drink less too. I think I had… No, I’m just kidding. Think I had one sip and I think you had one olive and then you hit your limit.
Daniel Newman: Is there anything wrong with ordering a very expensive martini, a little bit dirty with blue cheese olives and just dipping the olives and not ever drinking the martini? Why is that wrong? It seems maybe wasteful, but I feel pretty good about it.
Patrick Moorhead: Yeah, I’m not big on drinking. Again, I had one sip of mine. Feeling pretty good. Worked out twice, feeling pretty good. I need to hit it. I’ll probably hit it after work, but I am doing a-
Daniel Newman: No, no, I’m not trying to cut you out. I want to elaborate on this. We had a couple of people in our community actually comment on how good you look and I know you’re talking a lot more about fitness and health and longevity and I think someone said, “Hey Pat, how do you do it?” And so as someone that maybe for our friends out there in the audience, give them the quick 60 second. How do you, Pat, someone that’s made a major life change, lost 50 pounds in a year, turned to working out, better diet, better focus, supplementation, all that stuff. How do you balance that with a life as crazy as yours? Give everybody a minute because you know what? There’s probably other people out there that would love to make the change you’ve been able to make.
Patrick Moorhead: Thanks for teeing that up. And by the way, we did not script this. I didn’t know Dan was going to ask me.
Daniel Newman: No, it’s totally unscripted. I just remembered the tweet. Somebody tweeted you.
Patrick Moorhead: Yeah.
Daniel Newman: One of our regular engagers said, “Hey Pat, how do you do it?” Or guys, you know.
Patrick Moorhead: Yeah, so first off, real quick on the motivation, it was July 5th of last year, had this amazing weekend on the lake with the entire family, had a lot of Tito’s. It was fun. It was just amazing. And I just felt really awful on July 5th and I wanted to turn my health around and that really was the motivation. I ended up seeing a functional medical doctor, Dr. Oubre, if you’re watching, he is my, I lovingly refer to him as my witch doctor. But no, it was a combination of I think four or five things, Dan. First of all is diet, hardcore protein, a lot of fiber. I don’t track fat, I don’t drink, I don’t eat a lot of carbs and I was never really a sugar guy, so that wasn’t an issue. I’m taking a lot of supplements, a lot of supplements to help shore up anything that I’m not eating as I start to fix my gut. Sleep.
Big deal. I’m religious about my sleep. I went to bed at least one night, 8:30 when I was on the West coast, which is 10:30 central. But sleep is vital. I really don’t drink anymore. I might have a few sips, I might have one, but it slows me down and it takes away from what I’m trying to do. I’m doing four times a week, 30 minutes in zone two and I’m probably going to try to step up VO2 max. I’m doing a little bit of weights and then really regulating my stress. I’m not a worrier, but Dan, like you and I’m an entrepreneur and I’m on all the time. Why have one business when you can have four? And what I’ve really done is just take time out to do a timeout and chill and just reflect on life. So again, this is not medical advice, get your book, but I’m an open book. I’ll tell you exactly what my script is, what I do and what I’m taking because I really want to help other people live longer and better lives as they get into those final 10 years. Read Outlive by Peter Atia. There’s a lot of insights that I take from him, but I have a wingman, Dr. Oubre here in Austin, Texas.
Daniel Newman: No, that’s awesome, Pat. Thanks for sharing that. Obviously I’ve been inspired by your journey. I’ve had a pretty long and historic relationship with health, collegiate athlete. Went from a soccer player to looking like an NFL linebacker, both lifting but also had children, put on the weight like a lot of people did and then have focused on being fit through my career. I’ve fluctuated 10 or 15 pounds. I can definitely be the leaner, abs out, abs not out, but I admire it.
Patrick Moorhead: Listen Dan, you’re a motivator, dude. You motivated me too. I should have added that. You get up at 5:00 AM and you’re working out and that just blows my absolute mind.
Daniel Newman: We know the diet is 80/20, we know it, bestie. And the thing about it is that’s the part I struggle most with. I have no issue with the discipline of getting to the gym. I could supplement, I do like maybe a few too many Red Bulls. People always say, “How do you work so much?” Caffeine, lots of caffeine and motivation, but at the same time, like I said, you can lift your rear end off, but if you don’t eat right, you’ll never quite get right. And I think it’s been incredibly impressive. Good job to you. Depending if you’re my stage of life, I’m in my early forties, you’re in your middle later part of your fifties and as you and I joke a lot, don’t hold my inexperience against me. But at the same time, what we have to do to stay fit at 30 versus 40 versus 50. But hey, this is not a fitness podcast. But you know what? I think hopefully everybody out there appreciates a little bit getting to know us. We’re on episode 221, Pat, we’ve been doing this stuff a long time.
Patrick Moorhead: I know, buddy.
Daniel Newman: As an audience, you have come to follow along. It’s fun to get to know you out there and we appreciate all you joining in commenting and being part of our community and vice versa. We hope you get to know us a bit. But we got a great show this week. We’ve been on the road. We were in Las Vegas. We saw the first ever keynote in the Sphere in Las Vegas for HPE Discover, but there’s some other things. We hit Pure Storage accelerate. We did a Six Five event there. We were on the ground, we sat down with their CEO, Charles Giancarlo and also a handful of their GMs. And then the market was just crazy this week. It was Juneteenth, so we had a day off in the middle of the week, but we had a $3 trillion crossing for NVIDIA, which just absolutely owns my Twitter feed right now.
There’s like nothing else people are talking about. And that was furthered by a huge Dell, what was it? The Dell XAI and super micro XAI deal. That’s just massive. By the way, quietly Copilots plus PC started shipping and I know there’s been kind of like three milestones. We’re going to talk about that this week. So we’ll hit on a bunch of different things, Pat, and you and I did a ton of media. You just got off Yahoo Finance, rumor on the street, crushed it. And that was an encore to your CNBC hit yesterday. I did CNBC over Asia. I talked to the New York Times this week and I did an article for the Associated Press. So we were busy out there this week, back of office, advising front of office in the media and hey, let’s get started though, bestie. Look, HPE, Discover, I mentioned the Sphere, but there was a lot going on. What is, oh, sorry. Not at financial advice, people, don’t do anything we say. All right, onward, HPE.
Patrick Moorhead: Yeah, let’s dive in. So as you would expect, the entire conference was about AI. And to be more specific, it was about private cloud AI. And you can essentially look at enterprise AI infrastructure and services in two buckets. You have public cloud plays and then private cloud. And private cloud can be on-prem and enterprise data center. It can be in a colo, it can be a sovereign cloud, but essentially it is governed and managed by the enterprise itself. And it’s interesting, HPE was in a very difficult position as it was coming in as one of the last enterprise infrastructure companies to come in and do this, right? We saw IBM, we saw Lenovo, we saw Dell Technologies and then all the enterprise software folks. So they had to come out, they had to come out bold. What they came out with was NVIDIA AI computing by HPE. And a couple key points here.
First of all, very focused on integrated. It is a very integrated solution with two vendors software, NVIDIA that brings some of its AI enterprise software and also HPE’s with AI Essentials, Data Lakehouse and the HPE private cloud control plane. So it’s literally a turnkey. And the goal here is simplicity. And simplicity means AI time to market. And I think Dan, some of your research has suggested that time to market is a very big deal here. The other thing, and the company talked about three clicks to be up and running and I did a booth tour, I don’t do a lot of those anymore, but I literally saw them start over, boot this thing up and literally it’s all there, three clicks and you’re there. We’re going to be doing a detailed writeup on this. You can buy it on-prem or run it managed service via GreenLake.
Oh, and there’s four sizes, small, medium, large in Excel where small is inference only, going all the way up to Excel, which is inferencing plus rag plus fine-tuning. So yeah, it looked very simple. While I would’ve been would’ve appreciated to get a pre-briefing a lot earlier to think about it, it took me about three to four hours for it to really sink in how this was distinctive out there. And I will say NVIDIA AI computing by HPE is a differentiated solution. GA is in the fall, which means they must have been working on this for a very long time. So you and I both got the chance to talk with HPE’s CEO, Antonio Neri afterwards, and some interesting things came out. First off, they are targeting enterprise only with this what I’ll call an integrated appliance with NVIDIA, which Antonio is very, very clear on this.
Now AMD and Intel and Red Hat and VMware and Cloudera are very much also part of an experience if somebody wants to piece part this together, but clearly he has burned the boats and this is an NVIDIA only solution for now. And I think what would it take for AMD and Intel to get in there and be part of this is they need to have software to be able to plug in to the stack, I hate to say it, like NVIDIA. So a couple questions going to leave some oxygen for you. Where’s the training done? If small to Excel doesn’t include any training, where is this happening? By the way, the GreenLake for LLMs has been put on the back burner, not a lot of customers. I get it. The big action here is on an inference rag and fine-tuning. What’s the connective tissue to the public cloud? If that’s where the models are being created, how do I have some interchange between the public cloud and HPE’s private cloud? And the name choice was interesting. NVIDIA is the first name in this solution and not HPE, it’s not HPE AI computing with NVIDIA . It’s NVIDIA AI computing by HPE.
Daniel Newman: Yeah, that was an interesting decision, Pat, and I’m going to double click on that a bit with you because I agree. First of all, this will be a theme with me for a bit, but we are at this interesting inflection where there is no question that the front end, the CapEx, the build out of infrastructure for AI is in full effect. Where we’re starting to see, I believe is companies trying to figure out how to take the product to market and create consumption at the other end of the spectrum. Meaning it doesn’t matter how much of course Meta is using it for itself, as it for instance, but Meta is using it for itself so that when you open up WhatsApp and you’ve got your little AI assistant in there, you are using it and you’re increasing use and that’s driving more data, quality of advertising and that’ll create revenue.
So they’re spinning up their own vertically integrated AI experience and they’re spending a lot of money to do it, but they are also creating so much cashflow that that’s the big bet they’re willing to make. The hyperscalers for instance, are building this stuff out to be able to make it consumable the way we did compute in the first era. The private cloud comes down to there’s so much complexity in data and so many unknowns in data that are going to continue to create a challenge for the industry to be able to implement AI. You and I talked a lot about IBM last year and their end to end that included an AI and a data and a governance capability. Well, that type of capability is what I believe we have to bring to scale. And so HPE, basically Antonio told us, Antonio Neri, CEO who we talked to, told us like, “Look, we’re only going to focus on the hundreds of thousands of enterprises that could benefit from the consumption of AI.” Remember that. That was the demarcation between-
Patrick Moorhead: Dan, say that one more time because I think it’s super important.
Daniel Newman: So Antonio said they only want to focus on the hundreds of thousands of enterprises that could benefit from the consumption of infrastructure and AI. And so that’s where they’re focused on. So these T-shirt sizes, none of their T-shirt sizes are really when you talk about these out of the box AI solutions have anything to do with hyperscalers. Now of course, they said for those 10, 25 companies that want to consume and buy as many GPUs as possible, they’ll sell those, they’ll sell supercomputers to labs that want to buy supercomputers, but they’re talking about the average enterprise, hospital system, bank, university that is literally implementing their infrastructure for AI. Pat, those folks can buy off the shelf three clicks, like you said, turn it on and start to make meaningful progress in their AI journey with GreenLake. That’s what they’re talking about. By the way, that’s what Dell’s doing in its own way.
That’s what Lenovo’s doing in its own way. You even have the IBM I mentioned, VMware and what they’re trying to do. So this private AI thing and basically connecting this data that has to have residents on-prem, data that cannot cross borders, sovereignty, you’ll hear about sovereign clouds a lot. They’re trying to solve for that problem. And of course the cloud providers are going to try to solve for that problem too. So do not mistake for a minute that the cloud is not going to try to deal, they have hybrid options and offerings. But the truth is, Pat, we’ve said this endlessly on this podcast, 70 to 75% of enterprise data lives on-prem. So these companies have a good opportunity to provoke the market with AI that can be consumed easily. And that is what I believe HPE’s mission was. Ending this topic because I want to keep moving, but the choice of leading with NVIDIA to me is interesting, but Antonio didn’t mince words.
They’re not going to build these out of the box solutions with anyone else. And so I guess making your bet on HPE, we’ve had a continuum of companies wanting to make the whole bet and companies making the minimum bet. So far the companies that made the biggest bet have done the best. Over the long run, though I still believe AMD is a player. I still believe Intel was going to have a say. I was quoted, Pat, on this in my Asia CNBC segment, they started me off asking me about our friend Dan Ives, a former guest of the show. And he made this, he loves to make these comparatives, metaphors. He calls it a party. It’s 9:00 AM and this party goes till four. I jokingly said, “This is Coachella. The party hasn’t even started and this thing’s going to run for multiple days.”
The thing is we’re in the earliest innings. There’s so much AI left to go and so this is not a short play for HPE. It’s a long play. All right, let’s move on to the next topic, Pat. We’ve got Apple. So a couple of months ago, one of my biggest banger tweets was when I said what the heck’s going on with Vision Pro? I think Scoble piled on and Scoble’s historically been a, Robert Scoble has been historically a big Apple, but he agreed, which was rare in anything Apple, but basically it was like a week, Pat, everywhere you’d go, every tweet, it was some guy popping out of their cyber truck wearing their Vision Pro, walking into Starbucks, sitting there slurping their coffee and doing this. And the whole world was supposed to change because of Apple. And by the way, I tend to be critical of Apple, but then I always numerically, I often tend to be wrong, meaning I tend to have a belief that how is this going to work again?
But then when it actually does work, I’m like, “Shit, I’m wrong.” But the thing is, Apple has made the call to cut production or slow or stop R&D and development of its Pro 2. Now it’s important caveat here. It’s not stopping production of Vision Pro, it’s stopping the production of its high-end units, the part that we’ve all seen and experienced so far to focus more effort on a lower end unit. Now, Pat, that’s interesting because we basically have the continuum of XR, right from the Meta glasses, and there’s lower end even than that, but then all the way up to a $3,500 Vision Pro, which you have, right? I’ve only used it a few times, once with you, so I don’t have as much experience as you, but the use I’ve had with it, I felt it was heavy, it was klugy.
It reminded me of the HoloLens in terms of its size and shape, which I understood in the most industrious of utilization, but never really saw the consumer application for it. It felt like the momentum wore off. It feels like it’s a big commitment to carry. It’s a big commitment to use. I’ve seen people talk about putting it on on a plane, but the long and short is that I think they sold about 180,000 on the pre-order and then there was some sales that followed it up. But basically the company’s going to focus on a $1,500 cutback low end unit and that’s where they’re going to head with this thing. And Pat, I’m still concerned that this thing may bust even at 1500 bucks. I just don’t know that there’s enough value in it. So the long and the short is, is Apple over it’s skis on this one?
Meaning did it over commit here? It’s put the product out to market and now they’re kind of stuck. And should they have focused on the car? They ditched the car and then they chose the Vision Pro. And the second question is this market, this XR market, is it just slow to mature? So I’ll pause there, but it was very interesting. It only took less than really six months from the time it really hit the market to now for it to basically look like the bubble might be bursting on the Vision Pro.
Patrick Moorhead: Yeah, listen, there’s been so many people trying to bang their heads against this for so long and I think everybody collectively thought that Apple would come in and just save the day and hey, they must have figured it out and to give Apple some credit, they did move the ball forward in a couple areas. But no, I don’t even remember the last time I used mine. Maybe I used it for the first three weeks watching some videos and stuff like that. But it was great videos.
Daniel Newman: Weight training.
Patrick Moorhead: No, some movies were amazing on it and the visual quality was great, but even movie watching had its issues. You could see your hands. If you were watching a movie in bed or something, literally you had to have some light on to be able to control it. So big issues. I actually like Apple abandoning the high end Vision Pro and working on a more affordable version, but I would feel more comfortable if I felt like they had nailed the use case on the outset before they went and did that. But here we are, kudos to Apple for moving the ball forward on a couple, but we will see what happens. Until, I do not… Now in the enterprise market, I do believe we could see some pretty huge volumes if they shrank it down and made it cheaper. And I’m not even convinced you would have to make it cheaper, just make the battery life last longer or have replaceable batteries for enterprise. But getting it to let’s say a sunglasses plus type of format I think would be the right thing to do.
Daniel Newman: Whoa.
Patrick Moorhead: Just doing my dives tech impersonation.
Daniel Newman: No, you look good, man. Those are good-looking pair of Maui Jim’s. Dude, I admire how you wear those off the shelf glasses. They almost look like Cartier’s when they hit your face. But from Maui Jim glasses, you’ve found the best. So all right buddy, let’s move on. Next event on the ground, we sprinted from the Palazzo to the Conrad because over there it was Pure Accelerate, Pat, and we had the chance to both sit down on The Six Five with Charlie Giancarlo, CEO and chairman. We also spent a couple of days with the broader executive team. What was your take?
Patrick Moorhead: Yeah, so a few overall themes here. First of all, no surprise AI. And AI was really looked at two vectors. First of all helping enterprise build out their AI estate and then using AI in a copilot form and storage operations. And then there was this thing about getting more AI efficient in your operations. There was also a theme about enterprise data accessibility across all forms of data wherever it’s located. And Dan, I love hybrid multi-cloud fabrics and not only is this a hybrid multi-cloud fabric, but it’s also across different types of data. Security was a big topic, cyber resiliency and some of the features that the company is adding to help enterprise on that. And then upping the game on storage as a service with not only extending it to GPUs but also putting in some hardcore SLAs. So just ticking off some of the announcement, Pure fusion, right?
This is all about unifying the array, optimizing storage on the fly across multiple forms of data and obviously in the cloud. I talked about the AI Copilot that they’re putting on that to manage and protect data. And then related to Evergreen one for AI, it’s essentially doing storage as a service across new types of use cases, hence enterprise AI. And that’s the guarantee as they use it. Guaranteeing storage performance for GPUs across training, across inference and also HPC. And those are three very different type of environment. And when it came to security, we talked about the cyber resiliency.
And by the way, the thought here is why pay the cyber resiliency players when you can get it directly integrated into your storage platform. Also on security, there were secure application workspaces, which essentially this is their Kubernetes play with Portworx securing workloads in a multi-tenancy environment. And then finally I talked about these SLAs as storage as service. So service level agreements. These are guarantees, not to be confused with the Tommy Boy guarantee for brake pads here. But SLA number one, enhanced cybersecurity and recovery resilience SLA, I won’t go into the details, you can read about it. New security assessments out there. But no, a very interesting play. By the way, check out our video. Charlie makes some very provocative statements about his play into the hyperscalers and of course we get his points of view on all these announcements.
Daniel Newman: So you hit a lot of the announcements really well, Pat. And so I won’t belabor some of that. What I will say is the company continued to be very focused on its experience, the Copilot, very interesting. I see an opportunity. The best story we had, it was Sean, I don’t remember his last name off the top of my head, but he was the GM of one of their business units. And he was saying to us about I think it’s his brother-in-law or someone that’s in the storage actually works in government, I believe in storage and how he was asking about keeping up and the idea of these people being able to keep up with the technology innovation that’s going on so quickly, it’s almost impossible. So I see that as such a great application of a copilot to figure out how’s the best way to configure, to implement, to utilize, to leverage the technology.
This is a great case of fine-tuning an LLM to give and create benefit for a particular use case, Pat. So the other thing I want to point out is I started talking about the spreadsheet. I think I said something when we were on with Charlie, I said all the bean counters are going to have to start playing with their spreadsheet, but if Pure can convince one hyperscaler, not for its own internal use, but to start actually making Pure Storage part of their outbound go to market consumption model, Pat, that could be an incredible, one hyperscaler could be an incredible growth engine.
And the way they’re building, the way they’re able to accomplish pricing, the way they’re able to accomplish durability of their systems and then usability of their systems and experience within their systems and the way they’re built, like a layer cake there is a real opportunity because they’re so specialized and focused on Pure Storage that they could actually become a resell product through the hyperscale challenge, Pat, that could be massive. Charlie, you could see he lit up when I threw that out there. Start adjusting your spreadsheet, folks.
Patrick Moorhead: Yeah, man. He did. He did. And his confidence was off the rails.
Daniel Newman: You almost wonder, like I said, he didn’t say anything. This is just you and I insinuation, it’s always like he’s got something brewing.
Patrick Moorhead: Well it’s not always. I got to tell you though, there was extra special and we’ve spent a lot of time with Charlie and he seemed the most confident I’ve ever seen him about the future prospects and what he’s doing and how as customer conversations are going.
Daniel Newman: You could definitely sense things are moving directionally well for the company. And so you hit that on all cylinders. Adding the innovation, you’re talking about SLAs, building in cyber resiliency, creating and fusion, Pat. The idea of being able to work backwards compatible to make all your storage available to AI, that’s red-hot. That is red-hot. And so if you’re Pure Storage, you have to feel really good about it because that’s a big problem that we’re trying to solve. And you got all these companies trying to solve it in these companies that are storage, but we’re not storage.
Patrick Moorhead: Data problems. And by the way, you can’t solve your data problems unless you solve your storage problems too.
Daniel Newman: And so he’s basically saying, “Look, we’ll let the Databricks do the Databricks stuff, if you want to worry about data pipeline or if it’s on-prem, it can be like a Cloudera or can be a MongoDB.” Whoever they are from the data, he’s basically saying, “We’ll give you the data prep and readiness and we’ll make it backward compatible so you can make all your data available without all the complexity of creating data lakes.” And that’s like dude, look, we’ve been dealing with this for years. Let’s get all the data in one place. Did they just crack the code? Did they just solve the problem? It’s a really good question. All right, we got to keep moving on here. But good one from Pure, very positive event for them. Pat, the 3 trillion. Dude, you’ve been on every channel, on every network in the last-
Patrick Moorhead: Stop it, Dan, you’re the king of broadcast, get out of here. I think you did six of these and you spent an entire-
Daniel Newman: You had a killer 24 hours.
Patrick Moorhead: You spent the entire last weekend pontificating on X on what’s going to happen. But it has been pretty amazing. In one week three people have had the top spot.
Daniel Newman: And it’s created a lot of buzz and interest in the market. And so we’ve been brought in, I guess I talked to the New York Times, I talked to the Associated Press, I talked to CNBC in Asia, you did CNBC in the US, you did Yahoo Finance. And basically we asked the same question by everybody and it is the same thing. And like I said, there’s so much interest in this. So I’m going to just give my quick breakdown. I don’t think this is a topic we need to spend a ton of time. There’s a lot of our commentary already on the record here about this particular topic, Pat, but here it is. NVIDIA is not on top because of its sales of GPUs. Just be very clear about that. And the reason there are investors that are confident and the reason that the analysts keep raising the price targets is because of what they’ve been able to accomplish from a full stack standpoint and then from a partnership standpoint, they’ve basically built from top to bottom the entire AI layer.
And then they’ve made every single hyperscaler and OEM bet their farm on NVIDIA. And so if you look at how Intel gained market share early on with the CPU and the data center, it was saturation and at the point after, even when Intel started to be see more competition and see more flaws in what it was doing, it still took years and years and years to shed market. So if you look at NVIDIA, and first of all, you cannot assume they’re going to botch execution at some point. You have to assume they’ve executed well, they’ve got a yearly cadence, they’re continuing to innovate, they’re building libraries, they’re building partnerships, they’re building new capabilities like NIMs, which is part of solving that private AI thing, that makes it more durable. Where I’m concerned, Pat, is the saturation they have with a small number of customers is incredible.
It’s so dense with their five biggest customers. I do think AMD and what they built with ROCm the abstraction layers up with PyTorch, JAX that you can do more development up there. I think some of the enterprise capabilities that we’re seeing from companies like IBM and Red Hat to be able to do private AI and deploy it in containers using other hardware create some risk. I think pricing power for NVIDIA’s valuation to stick, they have to keep this pricing power and keep growing at this rate without much disruption. So it is possible though. And that’s the thing is when people say, “Is it possible?” Yes, it’s possible. Are they number one? Here’s what I’m going to say. If I had to order these three companies, I put Microsoft at one. It’s just so diversified between its consumer, its Copilot+, its Azure AI, its relationship with open AI, the software SaaS layer that they have, platform layers, Windows, the stickiness of the mass market and the devices and then the productivity tools is just so big. Company’s so well run.
Apple I think obviously is where I said something like Jensen will create AI and then Apple will make it consumable. What do I mean by that? The most basic consumption of AI in the apps will happen on people’s iPhones all day long. And I think that is enough to keep Apple up there and top. But we just talked about the vision profile. I think Apple’s become a bit boring. They’ve lost their market and innovation leadership, but they know how to make money. Tim Cook knows how to make money and you know what? In the market that is really, really important. So if I had to order them 1, 2, 3 right now, Microsoft one, NVIDIA two, Apple three. But having said that, NVIDIA has, I think the biggest risk with how fast it has ascended of having a just as quick descent, not back to 1 trillion or anything, but I could see it if the conditions or competition starts to rise, I could see it back in the two or two and a half in a short order because like I said, the density and concentration risks there are so different than the other two.
Patrick Moorhead: Yeah, real quick, I’m going to give NVIDIA opportunities to grow and then some risks here. So first and foremost, you’re going to see a lot. Well, let me give you precursors of what I’m looking for.
Daniel Newman: Yeah, please.
Patrick Moorhead: Like we saw with the dotcom boom and bust, there’s the build out and then there’s the downstream profitability that companies are making off of all that infrastructure build. And when you saw a lot of the dot coms not making money, going out of business. Now there was a lot of bad VC money going out to these startups, but it was an absolute bust. And Cisco at the time was the builder of internet and they were the NVIDIA of the age. I think the canary in the coal mine are the enterprise software companies. The SAPs, the ServiceNow, the Adobes, the SalesForces, that’s one. If they can’t make incremental profit dollars on this, this thing collapses on itself.
Daniel Newman: I love that you’re saying this, dude.
Patrick Moorhead: No, I appreciate that. And then there’s the consumer version of that, which are the Googles and the Apples. And then finally you have the enterprises that develop their own applications on these and they are trying to drive incremental profit dollars off that. If those don’t all come together, they don’t all three have to hit, but two out of three have to hit, this thing is going to fall right on its face. So those are the things to look for. Now, NVIDIA still has a lot of opportunity for growth and the biggest area is enterprise, exactly what we’ve been talking about with HPE, with Dell, with Lenovo, with Pure Storage. This is the untapped infrastructure opportunity right now. I do think we’ve got pretty much a guaranteed six to nine months of infrastructure growth even on the public cloud side.
So the risk that you’re looking at is in looking at the next 12 months. Now with that said, reality and perception could be very different things. If NVIDIA stubs its toe somewhere and the perception then all bets are off. AMD and Intel are very much competitive factors in the public cloud, not so much in private cloud acceleration. Now software is going to be everything. We haven’t even seen Intel’s enterprise AI GPU, that’s not going to be out until probably late 2025.
Daniel Newman: Yeah, I love the analysis there, Pat. I’ve probably put four or five long, long-winded tweets for all five of my viewers.
Patrick Moorhead: I don’t know, we have 3,300 concurrent X viewers right now. I’m feeling pretty good about that.
Daniel Newman: What’s up, X? Appreciate all you tuning in. But no, in all serious, I’ve just been belaboring consumption layer. I keep talking about the consumption layer, the consumption layer. Who’s using this? I get it because Pat, I said that this morning. I’m like Kohaus is sold out through 26, 3 nanometers sold out through 26, Apple, Qualcomm, NVIDIA, AMD, they’re absolutely going to make as many AI chips as can be made right now. They’re going to get sold into these hyperscale data centers. But who is consuming it? And by the way, who makes money? Who else makes money? And that’s the question mark we’ve got to answer. All right, we got 10 minutes left. I don’t want to have to shortchange any of these great topics, Pat. Our friend, Michael Dell, put out a tweet that got like 700 million views, but it did, it got a lot. And he basically announced that they are partnering with xAI on this mega mega deal, Pat.
Patrick Moorhead: Yeah, it took a while to piece it together, but I do love this new way of getting information out because most of the data or the information came out from X, Elon responding to people’s tweets. And Michael, with this initial tweet, here’s what I think we’ve been able to piece together. Dell’s responsible for half of those racks. I don’t think Supermicro has confirmed it or denied it, but it looks like it’s them. And obviously NVIDIA for the GPUs. Now there is this notion that this will be the largest GPU cluster in existence. I think a hundred thousand GPUs. I thought there were ones that were as large as that, but maybe that’s not true.
And as we’ve heard from Broadcom and NVIDIA and Marvell, they’re talking about a million GPU or a million ASIC or accelerator cluster. So financially, and sometimes people are just making this up, but it passes my smell test, about a million bucks per AI server rack with a hundred thousand NVIDIA GPUs, around $3 billion, supposed to be online, going to take a long time. Operational by fall of 2025? I don’t know. I don’t know if that’s accurate or not. Why would you be shipping racks? I don’t think it takes, unlike high performance computing in a national labs, I don’t think you’re dealing with proprietary stuff like a slingshot interconnect that you have figured out. But net-net, congratulations to Dell. Congratulations, Michael. You guys are crushing it. One thing I did want to point out is that the xAI deal was reflected in Dell’s AI server backlog reported in Q1. This wasn’t some slip that the company made getting this out there. So great job.
Daniel Newman: Yeah, so our friend Ed Ludlow from Bloomberg shared something from the Bloomberg intelligence team that I think is worth noting. They modeled the Dell Super Micro xAI deal for what it could be worth. And so he shared it, but he basically said if the deal for Grok 3, they asked that there’s a hundred thousand H100 requirement per the comments Musk made, right? Assuming you priced each server rack at a million a piece, total value of the deal would be about 3 billion. So a billion and a half to Dell, billion and a half to TSMC, 36 GPU per rack. 2,700 racks, 2.7 billion. So that was the numbers Bloomberg Intelligence came up with in a short, it was in a tweet. I’ll try to drop it in the show notes, but we’ll have to do our own modeling, Pat. But look, a huge win. Just what a huge, huge, huge win.
And this by the way, is why the OEMs are going all in with NVIDIA. This is the deal that only NVIDIA can get and they’re able to be, again, they all have to add their own value, but they’re being carried along by this. This is a absolute tailwind for so many different companies and the amount of demand it’s creating is basically making at least that first wave within the first orbit of NVIDIA. Those companies are benefiting. None are making profits like NVIDIA, but they are benefiting from a revenue standpoint and from, by the way, it’s not just about revenue here, Pat, when you actually are in an inflection in a market like we’re in right now, it’s also about relevancy into the next era. These companies cannot create a perception like they’re being left behind. And so they have to be seen as relevant here. And so Pat, great analysis on your end. Let’s move on to the next topic. Pat, our president of Signal65, one of the two babies that we’ve had together. We’re just kidding, people.
Patrick Moorhead: We ever talked about the third? So by the way, we’ve got Six Five Media. We have Signal65 labs and we have Signal65 economics.
Daniel Newman: Yeah. Yep, yep, yep. Two babies. One has already had its own baby, but the bottom line is that Ryan Shrout, Signal65 president, was out at a Best Buy taking pictures, checking out the store displays, but the Copilot+ PCs were front and center in Best Buys around America this week. And what I heard, Pat, was the early data, the whispers are volume was good. There was a lot of enthusiasm, a lot of excitement. We may have bought a few hundred of them at the Signal65 for our labs, but strong demand, strong display, strong interest. You saw Satya tweeting about it and Pavin tweeting about it. You saw Christiano Amon tweeting about it, and this is that first wave. Now, of course, like I said, there’s the debates about Intel and Meteor Lake and it being an AI PC, but this is the Copilot+ PC, the certified edition.
This was the moment it came into market, Pat, big thing. There’s been three waves of announcements here. So it was important but tempered in that way because we had the Microsoft build moment and then we had the Computex moment, and then now we had the actual go live moment. I always joke, Pat, that when you would acquire a company, and I’ve done a little bit of that over the last few years, you only get to announce it once. So you either announce the deal as struck or you announce the deal as closed, but you can’t really announce both. But this is such an exciting moment. They’ve actually managed to announce it three times. And so we are in a new era. This is by the way, when Pat and I have been talking about the consumption layer. This is one of those key consumption layers, not just selling the PCs, but what people are going to do with these LLMs on devices.
The apps they’re going to be able to buy, whether it’s Adobe subscriptions that are going to work better, whether it’s enterprise tools, whether it’s improving our social media or video consumption experiences. This is where money gets made in those second, third, and fourth layers of AI beyond the core infrastructure that NVIDIA is creating. So this is a really cool moment. So we’re going to get a wave of revenue streams for companies that are one in two tiers removed, the OEMs, the ODMs, the builders, the creators of PCs and devices. And now we’re going to start to see the ISVs and the app builders for both consumers and enterprises and small businesses starting to be able to capitalize on more AI compute power sitting on the device. It’s not all in the data center. And so a big moment, Pat, it is exciting. I look forward to seeing the numbers beyond the first day to see, because this has also, Pat, the difference of is this a Vision Pro plus, Vision Pro moment?
Patrick Moorhead: You got two minutes, buddy.
Daniel Newman: Vision Pro moment, or is it I’m on the way out. I’m turning it over to you. Or is this the beginning of a wave of really big numbers? I think it’s the latter.
Patrick Moorhead: Yeah. I got to tell you, I’m going to read a text that I got from an unnamed source related to Surface sales, some retail saying it’s their biggest PC pre-order ever, higher than any Mac release ever. So yeah, there are definitely some volumes here. So seven folks shipped. You had Microsoft with Surface, ASUS, Dell, HP, Lenovo, Acer, Samsung. Shame on you, ASUS, for breaking the embargo and shipping your units out earlier than you were supposed to. I’m glad to say that the early reviews are looking great. First of all, let’s pat Ryan in the back, review tests are showing how accurate the Signal65 testing was, and you’re seeing a 50 to 60% multi-threaded CPU advantage over Apple. That sure lowers in single core. I’m sure there’s some value in single core, but not a ton. The ridiculous battery life, it’s ridiculous, like 25 hours. Some people just leaving it at home. And I know we’ve heard that every single year for the past 10 years, but it’s true this time. Software compatibility. I need to do a double click on that. There were some, you knew any driver related stuff, like some outdated Kaspersky, which by the way is being banned here in North America. But stuff like games.
Daniel Newman: I spoke with him. I was on stage with Kaspersky at Sea Bit.
Patrick Moorhead: Interesting.
Daniel Newman: I thought that was cool. I don’t know if you-
Patrick Moorhead: Yeah, no, for sure. So final comments here. Sorry Dan, just trying to work this in before my next meeting. Kudos to Qualcomm and Microsoft. Herculean effort. Three to four years you have to place these bets, but you stuck the landing. Now, I am selfishly disappointed by recall being pulled back. I’m not convinced it’s insecure. I feel like the company overreacted, get it into Windows Insider now.
Daniel Newman: Great take, Pat. Yeah, I agree. That was one of the main features and now people aren’t going to get it straight away. Needs to happen. But Pat, great first few days and thanks for sharing that little insider bit. I’d love to get into your text messages for like 10 minutes just to see all the goodness in there. But that’s why you watch our show because we synthesize that goodness because we are lucky enough to have the opportunities to talk to some really, really interesting people every single week.
But Pat, great show, great conversation.
Patrick Moorhead: Great show.
Daniel Newman: A ton of fun. It was great to be back on the road with you. I think we have a couple of weeks off. We may run into each other in New York for just a minute, but we’ll be back on what? Next week, Friday? Regular show. Same time, same place. So thank you to all 3000 plus of you that have tuned in to watch our show this week. We appreciate the community. Hit that subscribe button, join us for all of the episodes here of The Six Five. But Patrick, it’s time to go. Say goodbye. Yell at us more on Twitter. That’s what we like. We’ll see you.
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.
