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Nvidia ( NVDA ) faces pressure from AI cost concerns and

competition

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Nvidia's ( NVDA ) Vera Rubin chip system expected to enter

production

this year

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Nvidia ( NVDA ) explores quantum computing and humanoid robots

By Stephen Nellis and Max A. Cherney

March 17 (Reuters) - When Nvidia CEO Jensen Huang takes

the stage this week for the company's annual software developer

conference, he will defend his nearly $3 trillion chip company's

dominance as pressure mounts on its biggest customers to rein in

the costs of artificial intelligence.

Nvidia's ( NVDA ) conference comes after China's DeepSeek spooked

U.S. markets with a competitive chatbot it alleged took less

computing power than rivals to create. Nvidia's ( NVDA ) stock

dropped because selling computing power in the form of chips

that cost tens of thousands of dollars apiece is what helped

Nvidia's ( NVDA ) revenue more than quadruple over the past three years

to $130.5 billion.

At the conference, Nvidia ( NVDA ) is expected to reveal details of a

chip system called Vera Rubin, named for the American astronomer

who pioneered the concept of dark matter, with the system

expected to go into mass production later this year. Those

details will come even as Rubin's predecessor, a chip named

after mathematician David Blackwell announced this time last

year, is trickling onto the market after production delays that

have eaten into Nvidia's ( NVDA ) margins.

Nvidia's ( NVDA ) big moneymakers face pressure from technological

change as AI markets shift from "training," which is the process

of feeding AI models such as chatbots huge troves of data to

make them smart, to "inference," which is when the model uses

those smarts to produce answers for users. Nvidia ( NVDA ), with a market

share exceeding 90%, owns the training market but faces

competition in inference - and how much market share those

competitors take will depend on how inference computing is

carried out.

'BIGGER HAMMERS'

Inference computing comes in many forms, from a smartphone

that rewords emails to a data center churning out complex

analysis of financial documents. Scores of startup companies in

Silicon Valley and beyond, as well as Nvidia's ( NVDA ) traditional

rivals such as Advanced Micro Devices ( AMD ), are betting that

they can sell chips that will get the job done at lower overall

cost - especially electricity costs, where Nvidia's ( NVDA ) chips

consume so much power that AI companies are investigating

nuclear reactors to power them.

"They have a hammer, and they're just making bigger

hammers," said Bob Beachler, vice president at Untether AI, one

of the at least 60 startups trying to unseat Nvidia ( NVDA ) in inference

markets. "They own the (training) market. And so every new chip

they come out with has a lot of training baggage."

But Nvidia ( NVDA ) has argued that a new kind of AI called

"reasoning" plays in its favor. Reasoning chatbots think aloud,

generating a few lines of text and then reading that text back

to themselves to think on the problem more - all of which uses

more of the computing power that Nvidia's ( NVDA ) chips excel at.

"The market for inference is going to be many times bigger

than the training market," said Jay Goldberg, chief executive of

D2D Advisory, a finance and strategy consulting firm. "As

inference becomes more important, their percentage share will be

lower, but the total market size and the pool of revenues could

be much, much larger."

BEYOND CHATBOTS

Nvidia ( NVDA ) is also expected to hint at its plans in other

computing markets, such as using new AI techniques that improve

chatbots to make robots more useful.

One big area of focus will be quantum computing. In

January, comments by Huang that

the technology was decades away

helped crash shares of companies betting on it and spurred

Microsoft ( MSFT ) and Alphabet's Google to come out

with claims

that the technology is

much closer to

usefulness. That in turn prompted Nvidia ( NVDA ) to announce it

would devote a full day of its conference to the state of the

quantum industry and its own plans.

Huang will deliver the keynote address on Tuesday.

Also on deck is Nvidia's ( NVDA ) efforts to build a personal

computer central processor chip, an endeavor first reported by

Reuters and revealed by Nvidia ( NVDA ) in January.

"It could eat into what's left of the Intel market," said

Maribel Lopez, an independent technology industry analyst.