Gerstner notes Nvidia revised Q2 datacenter guidance from $7 billion to $11 billion, defying negative expectations.
“People thought data center revenues this year were gonna be negative, and they just revised their guide from 7,000,000,000 in q two to to 11,000,000,000 in q two.”
Gerstner notes consensus forecast predicted negative 6% NVIDIA data center growth and hard landing in early 2024.
“if we look at the start of the year, the consensus forecast for NVIDIA was that data center growth would be negative 6% this year.”
Gerstner says professional analysts predicted NVIDIA data center revenue would decline 6 percent, highlighting how wrong forecasts were.
“The consensus estimate for NVIDIA this year was that data center growth revenue growth was gonna be negative 6%. Right? That's the pros. They got it that wrong.”
Gerstner recalls NVIDIA data center revenue forecasts shifted from -6% to +25% last year.
“Think about NVIDIA at the start of last year. Data center revenues were expected to shrink by 6%. Right?”
Gerstner quotes Jensen predicting data center infrastructure will double from $1T to $2T in four to five years.
“And over the course of the next four to five years, we'll have 2,000,000,000,000 of data centers powering software around the world and it will all be accelerated compute.”
Gerstner notes NVIDIA consensus data center revenue estimate was $22B but actual came in at $96B.
“at the start of last year, the consensus estimate of the smartest people covering NVIDIA day to day was that the data center revenue was going to be 22,000,000,000 for the year.”
Gerstner warns data centers acquiring independent energy producers could trigger regulatory intervention on grid pressure.
“if you start to see data centers pick off the independents, that could put pressure on the grid in a way that might bring the regulators in to voice their opinion.”
Gerstner reports Oracle, Amazon, and Microsoft are all moving forward with nuclear-powered data center projects.
“Amazon is buying this nuclear powered Talon data center facility, and now Microsoft this week announces with CEG that they're going to bring 3 Mile Island out of retirement.”
Gerstner says Jensen confirmed a trillion dollars of data center CPU replacement workloads over four years beyond AI training.
“he said, but we're also going to have a trillion dollars of CPU replacement, of data center replacement workloads over the course of the next four years.”
“In 2023, these companies spent $150,000,000,000 on capex building out data centers. This year, over 500,000,000,000. Though, that's not speculative. That is purchase orders. Those are buildings. That's power.”
Gerstner says capex jumped from $150 billion in 2023 to over $500 billion this year in committed spending.
“In 2023, these companies spent $150,000,000,000 on capex building out data centers. This year, over 500,000,000,000. Though, that's not speculative. That is purchase orders.”
Gerstner says AI capex jumped from $150B in 2023 to over $500B this year in committed purchase orders.
“In 2023, these companies spent $150,000,000,000 on capex building out data centers. This year, over 500,000,000,000. That's not speculative. That is purchase orders. Those are buildings.”
Gerstner says AI companies will spend over $500 billion on capex this year, up from $150 billion in 2023.
“In 2023, these companies spent $150,000,000,000 on capex building out data centers. This year, over 500,000,000,000. That's not speculative. That is purchase orders. Those are buildings. That's power.”
Gerstner notes OpenAI has not built data centers while Microsoft, Oracle, CoreWeave, and SoftBank are building them.
“I haven't heard them break ground on any data center. I hear Microsoft building data centers, Oracle building data centers, CoreWeb building data centers, SoftBank building data centers.”
Gerstner notes OpenAI has not broken ground on any $50 billion data centers despite earlier expectations.
“Well, a year ago, people thought that they were gonna go build all these data centers that were gonna cost $50,000,000,000 a pop. I haven't heard them break ground on any data center.”
Gerstner says Musk is building the largest data centers on Earth and eventually in space.
“Elon is building the biggest data centers on Earth and eventually in space of anybody, and nobody is better at turning those electrons into tokens.”
Gerstner relays Jensen Huang's view that nobody can stand up data centers as fast as Elon Musk.
“ The July pullback — Coreweave and semiconductor names down roughly 40% — was triggered by the open-source scare (Kimi and friends undercutting frontier revenues), because the entire edifice depends on frontier labs having the revenue to offtake the compute. If demand slips, the leverage cuts both ways and violently. Credit spreads on these deals remain wide — fear is already priced into the debt market. The counterweights: Gerstner relays Jensen Huang's assessment that nobody — not Microsoft, not Google — can stand up data centers at Elon's speed, and Jason's conviction that ”