It was another big week for theCUBE, including the soft launch of theCUBE’s east studio at the NYSE.
That event and the “big GPU short” were areas of focus for theCUBE Research industry analysts John Furrier (pictured, left) and Dave Vellante (right) on the latest episode of the CUBE podcast. The big GPU short refers to the 2015 film “The Big Short,” which focused on Wall Street guru Michael Burry calling the housing market crash. There’s something similar going on right now with GPU, according to Furrier.
“I talked to a lot of people. They can’t get product,” Furrier said. “The Chinese can’t get access to the chips either. They’re doing the workaround with the chip ban and access to the GPUs. They’re going through Amazon Cloud and Azure, and they won’t sell it to them because there’s all kinds of stuff. So, a huge thing.”
The big GPU short and its implications
There might be all sorts of people grabbing all the GPUs and sitting on them, according to Furrier. That could lead to a crash, which Furrier dubbed the “big GPU short.”
“You’re starting to see that if this becomes a problem, then that could just gut the market out. It could crash. The GPU market could crash, and it’s very much like a housing crisis kind of vibe,” Furrier said. “That would kill the CoreWeaves of the world and the way they’re purchasing the GPUs.”
There may eventually be an overcapacity in GPUs, but it isn’t likely to happen in the near term, according to Vellante. The CapEx build-out is continuing.
“If you just look at the CapEx of the big hyperscalers, plus Meta, they’re building out huge data centers. They’re buying GPUs hand over fist, and so they’re continuing that CapEx buildout,” Vellante said. “Right now, enterprise AI is, like I always say, it’s very chatty. They’re hitting singles. They’re not really doing the big heavy work.”
The cloud guys are currently trying to compete with one another in an arms race, according to Vellante. If it doesn’t eventually pay off, there will be a crash.
“But it’s not coming, I don’t think, anytime soon, because there’s still GPU shortages. Enterprises who are hitting singles want to start investing in bigger projects,” he said. “What they’re doing is they’re going to the CoreWeaves, they’re going to the Bedrocks, from Amazon and Google, and buying GPUs from those guys.”
The demand is still there, and there’s pent-up demand in the enterprise, according to Vellante. For that reason, the gig GPU short won’t happen this year.
“I don’t see it happening this year. I think you could be right, but I think it’ll happen after Blackwell starts shipping, and there’s maybe a glut of H100s and H200s and Hoppers,” Vellante said.
VMware Explore set to kick off
TheCUBE will be on the ground in Las Vegas for up-to-the-minute coverage of VMware Explore 2024 Aug. 26-28. Last week, the latest edition of Vellante’s Breaking Analysis series focused on assessing Broadcom Inc.’s acquisition of VMware, eight months on.
Enterprise Technology Research data conducted in advance of VMware Explore was very revealing. There were two points to explore in the recent post, according to Vellante.
“One is VMware is doing exactly what it said it’s going to do, and it’s frankly a winning strategy,” he said. “The second is it’s leaving opportunities on the table, which is actually good news for the likes of Nutanix.”
CrowdStrike is eyeing a reset
The recent incident tied to CrowdStrike Holdings Inc. will undoubtedly impact its quarter. But ETR data suggests replacing CrowdStrike is not an easy calculation for companies, according to Vellante.
“The bottom line, my takeaway is, there’s no question it impacted last quarter. The numbers are not going to be good. There’s no question in my mind that George Kurtz is going to be transparent and humble, and he’s going to reset his ARR forecast,” Vellante said. “They’re going to start building up again from there.”
The stock has been acting nicely lately, according to Vellante. The message moving forward will likely be one of a need to reset, to apologize and to set a course ahead.
“I think there’s exposures in terms of what they’re offering people. They’re still negotiating. There’s one question in here, ‘What have they offered you?’ Discounts. They’re offering us, maybe direct compensation discount on renewal, direct compensation, more favorable terms, and 50% say, ‘We’re still negotiating,’” Vellante said. “The next several quarters are going to be a reset for CrowdStrike.”
Watch the full podcast below to find out why these industry pros were mentioned:
Michael Burry, American investor
Mike Lynch, founder of Invoke Capital
Leo Apotheker, former CEO at HPE
Lina Khan, chair of the FTC
Kamala Harris, 49th United States vice president
Elizabeth Warren, U.S. Senator
Joe Kernan, news anchor
Jeff Bezos, chairman of Amazon
Steve Jobs, co-founder and former CEO and chairman of Apple
Britney Spears, American singer
Eric Schmidt, former CEO and chairman of Google
Ryan Gosling, Canadian actor
Steve Carrell, American actor and comedian
Matt Garman, CEO at AWS
Cole Crawford, founder and CEO of Vapor IO
Jensen Huang, founder and CEO of Nvidia
Lisa Su, chair and CEO of AMD
Pat Gelsinger, CEO of Intel
Steve Chen, co-founder and former CTO of YouTube
Donald Trump, 45th U.S. president
Ronald Reagan, 40th U.S. president
Michael Saylor, co-founder and executive chairman at MicroStrategy
David Floyer, analyst emeritus at theCUBE Research
Rob Strechay, managing director and principal analyst at theCUBE Research
Hock Tan, president and CEO of Broadcom
James Watters, senior director of R&D, Tanzu Division, at Broadcom
Trinity Chavez, lead anchor at NYSE
Brian J. Baumann, director of capital markets at NYSE
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