Technology

If the major cloud providers end up using their own custom silicon, that’s a major blow for Nvidia.

They already but AFAIK not at scale. What I believe, but that's my intuition I don't have numbers to back that up, is that Alphabet for GCP, Microsoft for Azure, Amazon for AWS and others do design their own chips, their own racks, etc but mostly do it as promotional R&D. They do want to show investors that they are acutely aware of their dependency on NVIDIA and thus try to be more resilient by having alternatives. What is still happening though is that in terms of compute per watt and thus per dollar, NVIDIA through its entire stack, both hardware (H100, A100, 40xx, etc) and software (mostly CUDA here) but also trust from CTOs, is the de facto standard. Consequently my bet is that GCP, Azure, AWS do have their custom silicon running today but it let's than 1% of their compute and they probably even provide it at a discount price to customers. It's a bit like China and their billions poured into making their own chips. Sure they are showing that they can (minus the dependency on ASML...) but at what cost? Making some chipset at equivalent performance with the state of the art is a research feat not to be downplayed but doing it at scale in a commercially competitive way is quite different.

Anyway that's just my hunch so if anybody has data to contradict that please do share.