Neocloud Operators Depend on Nvidia Chips Staying Expensive

The article discusses the reliance of neocloud operators, companies that provide specialized AI cloud infrastructure, on the high prices of Nvidia's chips. CoreWeave's CEO, who was interviewed, highlights the risks associated with this business model. Neocloud operators have built their infrastructure around Nvidia's expensive GPUs, which are essential for running AI workloads. As Nvidia's chips remain in high demand and short supply, these operators are able to charge premium prices for their services. However, this dependency on Nvidia's pricing power poses a significant risk, as any changes in the chip market could disrupt their business model. The article suggests that neocloud operators are aware of this risk and are exploring ways to diversify their hardware options. However, Nvidia's dominance in the AI chip market makes it challenging for them to find viable alternatives that can match the performance and cost-effectiveness of Nvidia's offerings.