Eric Schmidt, former CEO of Google, views Nvidia as a leading AI company: "Invest in Nvidia for success in the stock market."

• Nvidia-based AI data centers are expected to receive larger investments from tech giants, as stated by former Google CEO Eric Schmidt in a recent Stanford talk.
• Schmidt stated that big companies are requiring $20 billion, $50 billion, and $100 billion in AI infrastructure funding, according to his conversations with them.
• This week, Stanford posted a video featuring his remarks on AI, which was later removed.

Eric Schmidt, who led Google for a decade, advised Stanford students that, although he doesn't provide investment advice, he sees a clear opportunity in the stock market that doesn't involve purchasing shares of his former company.

According to Schmidt, in a video posted by Stanford and later removed, big tech companies are planning to invest heavily in AI data centers, which could cost up to $300 billion to construct.

Schmidt stated that he is conversing with large corporations, and these corporations are expressing their requirement for $20 billion, $50 billion, or $100 billion, which he finds extremely challenging. He also mentioned that he is close friends with OpenAI CEO Sam Altman.

Nvidia, which produces the dominant data center AI chips, has seen revenue increase by more than 200% for three straight quarters, as suggested by Schmidt. However, Google has developed Tensor Processing Units (TPUs), which could potentially compete with Nvidia's processors, although they are still in the early stages of development.

Schmidt stated that if $300 billion is being invested in Nvidia, it's important to understand the stock market. However, he clarified that this is not a stock recommendation and he did not disclose whether he owns Nvidia shares.

Schmidt, who served as Google's CEO from 2001 to 2011 and remained on the board until 2019, spoke to a group of undergraduates about AI. He later told the Wall Street Journal that he asked for the video to be removed because he had made a mistake about Google's work culture during the session.

Nvidia's central role in the generative AI boom, which began in late 2022, is highlighted by his candid remarks.

Nvidia is experiencing increasing demand from cloud companies and top AI developers, but Wall Street is questioning whether its major clients are excessively spending on AI infrastructure. Nvidia will reveal its market update during its quarterly results announcement on Aug. 28.

Nvidia may not be the only winner in AI, as Schmidt believes that big companies with more financial resources will have an advantage in investing in Nvidia chips and data centers.

"Schmidt stated that the difference between the frontier models, which number only three, and the rest of the market seems to be increasing. Six months ago, he believed the gap was shrinking, so he invested heavily in small companies. However, his certainty has waned."

Earlier this month, CEO Mark Zuckerberg stated that Meta's next-generation model in the Llama family will require 10 times more computing power than the current model.

Zuckerberg stated on an earnings call that future models will surpass the current growth.

Stargate, a $100 billion data center for AI, is being built by Altman in collaboration with OpenAI's lead backer.

"Schmidt stated that when Microsoft made the OpenAI deal, he believed it was the dumbest idea he'd ever encountered, outsourcing essentially his AI leadership to OpenAI and Sam and his team. Despite his initial skepticism, they are now on track to become the most valuable company."

Nvidia's dominance in the AI industry is expected to continue as many open source tools used by developers are built on the company's CUDA programming language. Schmidt stated that AMD's software, which translates Nvidia's CUDA code for its own chips, is not yet functional.

Schmidt, the founder of Innovation Endeavors in 2010, still holds approximately 147 million shares of Alphabet, worth about $24 billion, according to Bloomberg. Besides investing in startups, he has also been a philanthropist and has advised several government committees on technology.

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