Nvidia 'disrupts' the technology world again

The numbers from financial reports all show that cloud computing is generating huge profits for Amazon, Microsoft and Google.

However, this “cash cow” is facing an emerging threat with the rise of a partnership between AI cloud computing experts and a new “power broker” in the industry: Nvidia.

The threat grows

In 2023, Nvidia will launch its own cloud computing service called DGX Cloud. Not only that, the chip giant has also "nurtured" a series of startups competing with the big cloud companies, in addition to investments in AI cloud computing "players" such as CoreWeave and Lambda.

These moves didn't have a huge impact then, but it's easy to envision a competitive shift if computing needs continue to shift toward AI and Nvidia remains the industry's primary hardware supplier.

That concern finally became a reality when at Computex 2025, Nvidia officially introduced DGX Cloud Lepton software to help cloud service providers automate the process of connecting developers to computers, supporting the creation and running of services.

DGX Cloud has been growing rapidly, according to the WSJ . When it first launched, UBS analysts estimated the company could grow into a business with more than $10 billion in annual revenue.

Nvidia with its own cloud computing service called DGX Cloud is making the big cloud computing companies "restless". Photo: Nvidia.

Meanwhile, CoreWeave, which went public on the Nasdaq in March, is forecasting revenue of about $5 billion in 2025.

In fact, these businesses remain limited in their narrow focus on AI computing, and they still fall far short of the more than $107 billion in revenue that Amazon's market-leading cloud business is expected to generate by 2024.

Any cloud challenge, however, would be worrying for Amazon. While the cloud business accounted for just 29% of revenue in the most recent quarter, it accounted for more than 60% of earnings thanks to its high margins.

Microsoft and Alphabet’s Google, the next two big cloud companies, also have a lot to lose if the cloud computing landscape changes. Growing macroeconomic concerns are fueling caution around IT spending. Google is facing antitrust scrutiny in the US, while its biggest cash cow, search engine, is being challenged by OpenAI.

"Difficult" relationship and lesson about dependence

Under DGX Cloud's unusual deal, the cloud computing giants will buy and manage the equipment — including Nvidia chips — that form the backbone of the service.

Nvidia then leases the same equipment back to its enterprise customers, and provides access to AI experts and software as part of the service.

The WSJ notes that this puts the cloud computing giants in an uncomfortable position. While they can still make money through the deal, they are also being asked to help a service that could become a major competitor in the future.

This has left many industry giants hesitant, with Google notably absent from the list of companies participating in the DGX Cloud chip leasing market announced in May.

Roy Illsley, chief analyst at technology research firm Omdia, said entering into a deal with DGX Cloud would have made sense for cloud companies a few years ago because their own AI services were not well developed.

“They needed to react to the market as the AI revolution took off, and what Nvidia did was give them a solution when they weren’t quite sorted out on their own,” Illsley said.

With Nvidia not releasing revenue or profits, it's unclear how big DGX Cloud has grown.

A Nvidia GPU server. Photo: Bloomberg.

Still, according to a WSJ analysis, in its most recent fiscal year, the chip giant disclosed it now has $10.9 billion in multi-year cloud services deals, up from $3.5 billion in 2024 and largely to support DGX Cloud.

If the service is profitable — a likely assumption given the typically high margins in cloud computing — it would be a big name in the industry.

Nvidia is adamant that it isn’t trying to take on the cloud giants with DGX Cloud. The company says the service is simply meant to connect customers to Nvidia’s AI computing power and expertise in ways that weren’t possible before.

That may be true for now, but it would be naive to think that Nvidia doesn't have any plans going forward.

At the very least, DGX Cloud could give Nvidia a future option to grow a large cloud business and the current power to help shape how AI is developed.

Source: https://znews.vn/nvidia-lai-pha-binh-gioi-cong-nghe-post1563771.html