Nvidia Ruffles Tech Giants With Cloud Computing Move

Things are getting awkward for cloud incumbents as the AI chip giant eyes their turf

- Asa Fitch

Cloud computing generates big profits for Amazon.com, Microsoft, and Google. Now that cash cow faces a nascent threat with the rise of artificial-intelligence cloud specialists and a new industry power broker: Nvidia.

AI-chip maker Nvidia launched its own cloud-computing service two years ago called DGX Cloud. It has also nurtured upstarts competing with the big cloud companies, investing in AI cloud players CoreWeave and Lambda.

Those moves have yet to make an enormous dent, but a competitive shift is easy to imagine if computing demand continues to shift toward AI and Nvidia remains the sector's principal arms dealer.

DGX Cloud is already growing fast. UBS analysts estimated when it launched that it could grow into a more than $10 billion annual revenue business. And CoreWeave, which listed shares on the Nasdaq in March, is forecasting around $5 billion of revenue this year.

Those businesses are limited by their narrow focus on AI computing, and they pale in comparison to the more than $107 billion of sales Amazon's market-leading cloud business generated last year.

Yet any challenge in cloud computing would be worrying for Amazon: While the company's cloud division accounted for 29% of its revenue in its latest quarter, it accounted for more than 60% of its operating income thanks to its high margins.