We are Generation AI
Nvidia is the Bellwether for Gen AI - How can we shift hope into reality and reduce fear?
By Jurie Schoeman, BSG Managing Partner
Everyone knows we're living in the 4th industrial revolution: those previous revolutions evolved society from the age of steam engines and trains, to mass-production powered by electricity, then to the rise of computing, the internet, and nuclear energy. Now, we're in an era of machine intelligence and advanced cyber systems, with innovations in digital, biological, and physical technologies.
It's easy enough to acknowledge this, yet still stumble along without fully grasping the implications. When a global theme is "Will Gen AI take my job?" it’s important to prioritise reflection, connection, and learning – especially during a week like last week – we’re living that change now: we’re Generation AI!
Wednesday, August 28, 2024, NYSE closing bell: we’re in a world where ordinary people – I mean those who aren't paid to manage investment funds – organise watch parties in the US, or stay up until 10:30 PM here in SA on a Wednesday night to see the quarterly results update for a technology company that many people didn’t even know about a year ago, but which is now "the most important stock in the world" – Nvidia.
Nvidia's stock price has become a bellwether, the barometer for Generative AI. Nvidia GPUs are the key component in hyperscaler cloud computing centres, which is why the company's quarterly reporting was so crucial. Nvidia has been riding the hype/hope cycle, going from a $560 billion business in August 2021 to $3 trillion three years later.
It's a bellwether because these quarterly revenue numbers signal to the world whether the hype/hope is a bubble about to burst or if it's moving into tangible results. If the hyperscalers are reducing their orders for Nvidia GPUs, it indicates they don't see enough demand coming from their own customers for Gen AI services enabled through their cloud infrastructure and services. This would be evidenced by a decline in quarter-on-quarter (Q-on-Q) revenue growth and a negative forward outlook. Conversely, the signal of a shift to real impact and confident expectations is through increased demand, evidenced by strong Q-on-Q revenue growth and a positive forecast. The result was, of course, positive Q-on-Q revenue growth and an even more positive forward outlook, though it wasn't strong enough to please the most bullish investors, leading to a decline in the share price during the rest of the week.
This situation got me thinking about the gap between hype or hope and fear / scepticism. It's fundamentally the history of the world (it took 1800 years to move from the first known steam engine design to the original Industrial Revolution), but with the sheer speed and scale of Generation AI disruptive changes happening around us, how can we turn hope into reality and mitigate the fear? Over the coming weeks, I will be sharing my thoughts on how we bridge this gap.
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