Nvidia's Jensen Huang Strategy: Creating Buyer Competition in Neoclouds

Nvidia's strategy under Jensen Huang involves creating buyer competition to protect demand for its GPUs. According to Invest with the Best, Nvidia wants a crowded field of Neoclouds and inference providers to create demand for its products.

The company is resetting its gross margins to 72-73% next year, down from 75%. This means that costs have been absorbed and products have been repriced. The goal is to remove anxiety about the settling price and keep pricing power with Nvidia.

This approach is not new for Nvidia, which has used it in the past with gaming, crypto, and cloud markets. The strategy involves making customers rich by providing them with options and never competing directly with them. This way, if one large customer vertically integrates or chooses a different supplier, such as AMD, several others will be eager to take their place.

For startups, this means having more places to rent Nvidia capacity outside of the big three clouds but also less leverage to negotiate against Nvidia itself. The long-term goal is to create a competitive market where multiple Neoclouds and inference providers are vying for business.