Nvidia Cloud Potential

Nvidia’s Omniverse Avatar(same as FBs Metaverse)platform is a cloud based service so while most of their business is chips related this component has huge potential for recurring revenue in the cloud. So I thought I would post one related Q&A (you can find the entire Q&A on seeking alpha or at the Nvidia web site)from the Earnings call that discusses (be CEO Jensen) it’s Omniverse potential. I think it is quite amazing. Along with many of the stocks on this board I’ve included Nvidia in my portfolio for the past 4 years and have been very pleased.

Aaron Rakers

Thanks for taking the question, and congratulations on the results. I guess I wanted to ask about Omniverse, obviously a lot of excitement around that. I guess the simple question is, Jensen, how do you define success, in Omniverse as we look out over the next, let’s call it 12 months? And how do we think about the subscription license opportunity for Omniverse? I know you’ve talked about 40 million total 3D designers. I think that actually doubled, what you talked about back in August. I’m just curious of how we as financial analysts should start to think about that opportunity materializing.

Jensen Huang

Thanks. Omniverse success will be defined by #1. Developer engagement connected with developers around the world, 2. Applications being developed by enterprises, 3. The connection of designers and creators among themselves. Those are the nearest term – and I would say that in mind, type of a definitive success. Near-term also should be revenues and Omniverse has real immediate applications as I demonstrated at the keynote and I’ll highlight a few of them right now. One of them, of course, is that it serves as a way to connect 3D and digital designing world. Think of Adobe as a world, think of Autodesk as a world, think of Rivet as a world, these are design world in the sense that people are doing things in it. They’re creating things in it and it has its own database. We made it possible for these worlds to be connected, for the very first time. And for it to be shared like in cloud document. That’s not been possible ever before. You can now share work with each other, you could see each other’s work. You could collaborate. And so in a world of remote working, Omniverse’s collaborative ability is going to be really appreciated, and that should happen right away.

We would like to see that happen in very near terms. And that drives, of course, more PC sales, more GPU sales, more workstation sales, more server sales. The second use case is digital twins and you show – you saw examples of how several companies that are seeing using Omniverse to create a digital twin of that city so that they could optimize radio placements and radio energy used for being forming. You saw BMW using it for their factories. You’re going to see people using it for warehouse, logistics warehouse, to plan and to optimize their warehouses and to plan the robots. And so digital twin applications are absolutely immediate. And then remember robots has several clients. There’s the physical robots that you saw and a physical robot with the self-driving cars. A physical robot could be the car itself turning into a robot so that it could be an intelligent assistant. I demonstrated probably the – in my estimation, the largest application of robots in the future and it’s avatars.

We built Omniverse Avatar to make it easy for people to integrate some amazing technology. We’ll consider vision with speed recognition, natural language understanding, gesture recognition, facial animation, speech synthesis, recommender systems. All of that integrated into 1 system and money in real, time that avatar’s system is essentially a robotic system. And the way that you would use that is for example, the $25 million or so retail stores, restaurant, places like airports, train stations and office buildings and such where you can have intelligent avatars doing a lot of assistance. They might be doing checkout, they might be doing check in, they might be doing at customer support. And all of that can be done with avatars, as I’ve demonstrated. So the virtual, the virtual robotics application, digital vibes or avatars, it is going to be likely the largest robotics opportunity. So if you look at our licensing model, the way it basically works is that inside Omniverse, each 1 of the main users, and the main users could be one of the 20 million creators, or 20 million designers the 40 million creators and designers around the world when they share Omniverse, each one of the main users would be $1,000 per user per year.

Don’t forget that intelligent livings or intelligent users that are going to be connected to Omniverse, will likely be much larger as digital bots than human. So I’d mentioned 40 million, but there are 100 million cars. We’ve heard that the new cars will all have – will all be – have the capability to have something like an Omniverse Avatar. And so there’s 100 million cars to be $1,000 per car per year. And in the case of 25 million or so places where you would have a digital Avatar as customers support or check out smart retail or smart warehouse or wherever it is, those Avatars are also – would each individually be a new account, and so they would be $1000 per Avatar per year. And so, it’s like – those are the immediate tangible opportunities for us and I demonstrated the application during the keynote. And then of course, behind all of that, call it a couple of 100 million on a digital agents, intelligent agent, some of the interim for low by some of them avatars at $1,000 per agent, per year. Behind it, our immediate nvidia GPUs, DTC, and via GTS in the cloud, NVIDIA GPS servers.

And minus,-- my guess would be the hardware part of it is probably going to be about half the licensing part of the card view about half will be timing. But this is really going to be one of the largest graphics opportunities that we’ve ever seen. And the reason why it’s taking so long for it just to manifest is because it requires 3 fundamental technologies to come together, I guess, 4 fundamental technologies for it together. First of all this could be the graphics, second, is physics simulation, because we’re talking about things in world that has to be believable. So it has to obey the laws of physics. And then third is artificial intelligence as I demonstrated. And all of it runs on top of a Omniverse computer that has to do not just AI, not just physics, not just computer graphics, but all of it. And so what long-term people – why people are so excited about it is, at the highest level, what it basically means is that long-term when we engage the Internet, which is largely 2D today, long-term every query would be 3D.

Instead of just querying information, we would query and interact with people, and Avatars, and planes, and places, and all of these things are in 3D. So hopefully, one of these days that we’ll try to realize it as fast as we can, every transaction that goes over the Internet touches a GPU. And today that’s a very small percentage but hopefully one of these days it’ll be a fair bit of high percentage. I hope that’s helpful.