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Nvidia this week reported that its earnings for the fourth quarter ended Jan. 29 were $6.05 billion, down 21% from a year earlier. But Jensen Huang, CEO of Nvidia, said generative AI is expected to create a significant opportunity that will accelerate later this year.
Nvidia’s stock price soared on the opportunity, and Huang noted how generative AI will be front and center at its GTC event the week of March 20th.
Sharon Goldman of VentureBeat wrote a long article about how Nvidia dominated the AI market. Goldman said “the explosion of AI hype in 2023, as major language models like ChatGPT and DALL-E 2 have launched generative AI into the public consciousness in a way not seen, perhaps, since the rise of the iPhone in 2007”.
I spoke with Huang this week and he said the combination of user-generated content and generative AI will help create content for the metaverse at an even faster pace than previously expected. We talk about this and other gaming trends in our talk. I also asked him if he has a chance of putting Nvidia chips in a future Nintendo game console.
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Here is an edited transcript of our interview.
GamesBeat: Generative AI is having its moment. You’ve been talking about this for a relatively short time. What convinced you that it is more important?
Jensen Huang: Of course, ChatGPT has only been here for a short time, about three months. But, as you know, when it comes to big language models, the industry has been playing with them for some time now. If you look at some of the innovations in the last year, whether it’s image generating templates, that started with our ProGAN work and now our GauGAN work, all the GAN work that we’ve done and the automatic variable encoders that we’ve done. A cousin of the automatic variable encoder has become diffusion models. Its stability, scalability, turned out to be amazing. It all added up last year.
We now have generative models for proteins. We have generative models for chemicals. We have models that generate language, text. We have generative models for images and video. As you know, we are working on generative models for 3D. You will not be able to populate the world’s Omniverse, the metaverse, with content created by humans. It has to be perceived through computer vision, or generated, or a combination of both.
GamesBeat: What I’ve seen in the last month are five different startups combining generative AI and user-generated content in games. Even Roblox, last Friday, showed their demonstration of this. It seems that users are not extremely talented professionals, but if you give them generative AI, they become capable of creating usable or playable things.
Huang: It’s exactly as you say. You can generate the first version and let me modify it. I don’t think I can create a template from scratch, but I bet I can modify one you put in front of me. It’s no different than people using clip art on Powerpoint slides. They are always combining other people’s work and modifying it. It’s much easier to build something around that. I think it will boost content creation.
GamesBeat: It’s more believable now that we have these different things. We have the Omniverse. We have generative AI. We have UGC. All this contributes to the metaverse.
Huang: That’s right, exactly. The pieces are falling into place. It’s very exciting. The characters – you can ask them questions, right? These are characters you can really talk to. They can speak in different languages. They can understand what you mean. Using recovery models, a company building a medieval game or a sci-fi game or a Battlefield game, they can take the entire knowledge base of the story, the narrative of that game, and teach just that to an AI. The entire worldview of the AI game can be completely medieval and strictly focused on gameplay. It will be safe. It will be game specific. Now we have all the necessary pieces of technology to help people do that.
GamesBeat: Do you think we’re getting any closer to having a gaming metaverse and a corporate metaverse benefitting from each other through something like the Omniverse?
Huang: I’m less certain of that. We don’t spend as much time on the consumer side. But from the industrial side, the energy is very high. Now, with the combination of generative models and proprietary models brought together, you can get up and running very quickly. The time of the industrial metaverse is coming.
GamesBeat: For today’s game results, you’ve noticed that games are in recovery. That’s a 16% increase from the previous quarter, but still a 46% drop. What’s the pattern we’ve seen play out in games with regards to the results you report?
Huang: We subtract all COVID time. Let’s say from late 2019, 2020, 2021 and 2022. The game sales business was averaging about $1.5 billion a quarter going into COVID. We’re in a world today where sales are likely to reach $2.5 billion next year. A little lower at the beginning as we continue to normalize the channel, and then probably higher than in the second half of the year because we have seasonality. The difference between $1.5 billion versus $2.5 billion is basically, if you will, subtracting the pandemic.
If you look at what’s happening on Steam, that’s pretty much it. The growth of Steam, the number of active players on Steam, is a reflection of that. And of course China will bounce back again, which we’re very excited about. New games are being approved now. China is back to recovery. We’ll see how it goes. I think the gaming market has definitely grown over the last three years.
GamesBeat: Do you think there’s an opportunity to get on Nintendo’s next console?
Huang: Let’s keep our fingers crossed. We’re very good at building energy-efficient gaming systems, number one. Number two, we’re pretty convinced that the next generation of video games is heavily ray-traced, if not fully ray-traced, and based on generative AI. You know we’re working really hard – RTX is really based on two fundamental technologies: raytracing and AI. I think you’ll find that the next generation of video games will use these two technologies more and more. We’re incredibly good at it. Hope that happens.
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