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Nvidia Corporation (NVDA) Pairs With Microsoft Corporation (MSFT) in AI Power Move

Nvidia’s new HGX-1 hyperscale GPU accelerator is being positioned as a standard for fast, flexible AI cloud computing

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Cloud computing continues to grow in importance. And with it, artificial intelligence — or AI — is an increasingly critical component. It’s also extremely resource-intensive, requiring huge amounts of computing power. Setting up a cloud computing center that can support AI is time consuming, complex and scalability is a problem.

Nvidia Corporation (NVDA) Pairs With Microsoft Corporation (MSFT) in AI Power Move
Source: Nvidia

But Nvidia Corporation (NASDAQ:NVDA) is making a move to put itself at the center of cloud computing and AI with the announcement of the HGX-1, a new architecture standard featuring NVDA hardware, developed in partnership with Microsoft Corporation (NASDAQ:MSFT).

If HGX-1 takes off, it could do for cloud computing and AI what the Wintel partnership between Microsoft and Intel Corporation (NASDAQ:INTC) did for the PC era.

The Cloud Computing Challenges

Cloud computing hit new levels in 2016, with cloud revenue growing 25% on the year and no end in sight. Besides the basics of hosting applications, the cloud is increasingly tied up with AI. Personal digital assistants like Apple Inc.’s (NASDAQ:AAPL) Siri may be accessed from a local device like a smartphone, but all the computing needed to analyze speech and spit out answers is done in the cloud.

That’s the only way to get the massive computer firepower needed for AI and make it accessible to the devices, apps and services that need it. Autonomous vehicles are another example of AI, and reliance on the cloud.

There are several challenges with all this cloud-based infrastructure.

The first is that traditional CPUs aren’t up to the task of crunching the data. At least not affordably. That’s where Nvidia comes in. Its graphics cards have proven to be the ideal solution, providing massive processing power at a reasonable cost.

The second issue is that with so many companies pursuing cloud computing solutions and such a range of applications, configuring a cloud computing center is a big job. Scalability of custom solutions is also a problem.

What’s needed to keep costs down and support rapid expansion is standardization.

Nvidia and Microsoft Position HGX-1 as the Solution

Microsoft knows a thing or two about cloud computing. Its Azure solution is a big player in the cloud computing market, second only to, Inc.’s (NASDAQ:AMZN) Amazon Web Services.

Microsoft also knows first-hand the value of being a key partner in setting an standard. Working with Intel as part of the “Wintel” partnership helped make Microsoft the giant it is today,

And Microsoft sees NVDA as being critical to the future of AI and cloud computing. The company is switching to chips based on ARM architecture, from ARM Holdings plc (ADR) (NASDAQ:ARMH) for server CPUs as part of its Project Olympus initiative. One of Microsoft’s partners in Project Olympus is Nvidia.

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