Nvidia & Samsung – GTC Day 2

Samsung’s fate is bound up with Nvidia

GTC Update: Nvidia Dynamo – the most critical launch of 2025. 

• GTC 2025 is in full swing and as more details emerge about Dynamo, it is clear to me that this is by far Nvidia’s most important launch of 2025.
• Dynamo is an operating system for a data centre that is producing tokens (inference) for a generative AI service.
• Dynamo looks at the system of GPUs, memory and networking and works out the most efficient way to manage these resources based on the nature of the requests that are coming in.
• It allows the data centre to produce as many tokens as possible for its resources, which maximises revenue given that industry standard pricing is $ per million tokens.
• Dynamo makes more sense now because of the new family of “reasoning models” that improve performance by massively increasing the number of tokens that they produce per request.
• This means that inference is going to quickly become the largest function of the data centre as RFM has been predicting for some time.
• To be as dominant in inference, Nvidia needs more than CUDA as I think that CUDA is much less of a control point in inference than it is in training.
• Enter Dynamo which promises to do for inference what CUDA has done for training.
• If it is as good as Nvidia claims (see here) then Dynamo users are going to become more competitive given the efficiency improvement.
• However, Dynamo is only likely to work really well on Nvidia hardware and the fact that anyone would want to run it on competing silicon does not seem to have been considered.
• “In theory, you could do that as we have made it available to open source” was the response to the question, but obviously, this is not what it has been built for.
• Consequently, if Dynamo proves to be very popular with clients, it is likely to raise barriers for data centre owners who are considering running inference on competing silicon.
• Given that CUDA has been around for over 20 years and Dynamo is brand new, Dynamo has a long way to go if it is going to replicate CUDA’s effect in training, but the seeds have been sown.
• Competitors expecting to take a bite out of Nvidia when it comes to inference need to act quickly if they don’t want the slightly open door of inference to be quickly slammed in their faces.

Samsung: Bet on HBM4. 

• Samsung apologised yet again at its AGM for its lack-lustre performance in memory and has promised to do better in 2025 setting the shares up for a substantial re-rating if it is successful.
• Like the Note 7 that spontaneously exploded, Samsung’s memory problem is simple in that its memory offering for AI was not good enough allowing SK Hynix and Micron to humiliate it at its own game.
• This has greatly damaged both Samsung’s performance and its reputation as memory for AI is one of the hottest areas in semiconductors right now.
• If one takes Nvidia’s roadmap seriously, the importance of memory is only going to increase meaning that high-bandwidth memory (HBM) is going to continue to grow like wildfire.
• The result of Samsung messing this up has been poor performance for some considerable time and a share price that fell by over 40%.
• With a discount of this size, the market is assuming that Samsung is not coming back in HBM, but we have seen this sort of thing before.
• When the Note 7 started catching fire in people’s pockets the view was that this would cost Samsung its leadership in smartphones, but the company buckled down, found its backbone and dug itself out of its hole.
• There is every indication that this is exactly what is going to happen here as the problems it has had in HBM3 are fixable and I think that Samsung has the depth of character to do what it needs to get HBM4 right.
• Hence, I don’t think that Samsung is going to get very far with its 12-layer HBM3E but I expect it to qualify with Nvidia for HBM4 that will be going into the Rubin chip that will become available in H2 2026.
• Samsung is currently on 13.2x 2025 and 9.7x 2026 PER and I suspect that the 2026 estimate is too low.
• This sets the scene for a big rally triggered by the news of qualifying with Nvidia for HBM4 which I am hopeful will come this year.
• I have a position in Samsung where I am looking for around $1,600 on the global depositary receipt (GDR) that trades on the London Stock Exchange.