Well, here's a treat. Shares in Marvell Technology rallying sharply on news of a new partnership with none other than Nvidia this morning, which includes an investment by Nvidia of $2 billion into the company. And joining us now exclusively, Nvidia's founder and CEO, Jensen Huang, and Marvell chairman and CEO Matt Murphy. Gentlemen, thank you for coming on the show.
I'm going to start with you, Jensen, because this is a remarkable deal. I'm trying to understand if I get this right, the customers will have a level of choice that are currently not available, which could mean great things for your network portion of your business.
The AI inflection point has arrived. We're going through a platform transition. All of the world's data centers are going to be replaced with this new form of doing computing we call accelerated computing. Of course, the vast majority of the data centers would be powered by Nvidia CUDA GPUs. However, for customers who would like to also have specialized versions that they build themselves, we're extending our architecture starting with the networking architecture, basically the entire chassis of our Grace Blackwell and Vera Rubin systems. And we're going to extend that through NVLink and connect it to Marvell, and together we'll be able to address the customers whether they would like to use all Nvidia gear or they would like to augment our Nvidia gear with their specialized processors, and together we can be able to address a much, much larger TAM.
Okay. So Matt, congratulations. I know this is a really big deal and I've followed your company for many, many years and you did tell me over and over again look you would be part of the future of AI which is now obviously coordinated. I want to know whether you have customers and you got some big hyperscaler customers that will be thrilled that they get a chance to be able to kind of get away from who they necessarily been trapped with.
Well, I wouldn't call it trapped. I think customers are going to be very excited about this. I mean, what customers are looking for, Jim, is flexibility. They're looking for technology innovation. They're looking for their partners to actually work together to drive a very robust ecosystem. And I think that's really what we see from the Marvell side is we have key strengths in interconnect technology, silicon photonics, custom silicon, but then Nvidia and as Jensen mentioned, they're not just a GPU company. This is an asset-rich company, right, with key networking IP, NICs, DPUs, CPUs, interconnect, rack scale. So these are all things that now Marvell together with Nvidia can provide. We can drive interoperability. We can drive complete solutions and we can enable customer choice. So I think it's going to be a win for everybody.
And you know Jim, there's really a couple of major specialized semi-custom chip players out there and both of them have a large installation of Nvidia architecture now. And so both of them have large installations of NVLink. They use the standard chassis that Nvidia provides, the Grace Blackwell chassis. And so all of this can be extended in the future. These data centers will have, you know, GPUs and they have some specialized XPUs on their side, but they have the benefit of connecting all of it with NVLink, connecting all of it with Spectrum X. They could add Nvidia Vera CPUs to their racks. They could add Nvidia's storage processors, Bluefield 4, to their rack. And they could even add Nvidia LPUs, the Grace chips, to their racks. And so all of this will be system architecture compatible. It'll be ecosystem compatible. And it expands the opportunity, makes it easier for them to interoperate and makes it fantastic for us as we expand our TAM.
Let's talk about the TAM and how big it is. Matt, one of the things that you taught me is, you know, everybody there's room for everybody. And in some ways people might say, well, you're now competing with Nvidia. I obviously when you get $2 billion, I don't think it's much of a competition. But can you talk about the size of the market? Because I think people right now, particularly with the stocks really getting hurt, I don't want to emphasize the stock talk too much, but maybe people are thinking that maybe the TAM isn't as big and maybe the whole thing is just kind of a wonder that is not necessarily going to be economic long term.
Yeah, let me give you some thoughts on that and I'll have Jensen chime in as well. But I'm going to bring up a story. Okay. When Jensen and I started collaborating, which goes back probably five or six years, maybe longer. Okay, the two companies have been working together for some time. We had a discussion once and it was about how people typically look at the semiconductor market. People typically look at it as a zero sum game. One's here, one's here, one wins, one loses, and it's just all nets to zero. And that happens in part of the semiconductor market. And what you actually said to me was companies like Nvidia and Marvell, we create the market. We create the TAM. Okay. And so if you look at over the last five, six years, look at the explosion in the AI TAM that's been led by Nvidia and also followed up by companies like Marvell and others. But this partnership is again a move that we're making to keep increasing the overall TAM and then letting both companies actually participate more richly in there. And I mean you can comment on it but the TAM, you know, per gigawatt is just in the deca-billion dollar range at this point.
Yeah. The part that most people miss is the whole nature of AI, the processing of the software is all done in real time. Basically, it's a generative form of computing. The way we used to do computing in the past, you would retrieve pre-recorded information from, you know, typed in by humans. But now, AI generates content and generates information in real time. This inflection point, this platform shift where all enterprise software in the future, every single character you see on your display, every piece of information that is produced has to be generated in real time. And so all future enterprise software will come along with it what we call tokens. These tokens are going to be manufactured, produced, processed by the infrastructure that we create. And so the multiple trillions of dollars of enterprise software is now in transition into a token-enhanced enterprise software world. In the future, the multiple trillions of dollars of enterprise spend will all be token-enhanced. And so this is what everybody is chasing. Now the moment of now is really important because two years ago we had the ChatGPT moment where consumers had the benefit of enjoying AI for the first time. But now with Claude Code and OpenAI Codex we're now seeing the agentic moment of that enterprise software. We now have the killer app of enterprise computing finally and it's being adopted here of course inside Nvidia. The adoption is incredible. You're hearing news of course of Anthropic growing some incredible number of billions of dollars in just a month. This is now the inflection point of enterprise AI arriving and all of that computing has to be done in real time and that's what this infrastructure is designed to do.
So Jensen, it's David. So listening to you then I mean are we even able to calculate what the TAM may be? I mean, you mentioned Anthropic's exponential increase in revenues. What we're seeing is sort of something we've never seen. Is it just endless? I don't know. I'm just curious, having listened to what you just said, trying to understand what that means.
The simple logic is this. In the today, most enterprise software is 90% gross margin. It's basically software licensing. In the future, enterprise software will be larger than it is now, much larger. And it's very likely that their gross margins will be lower because it will be enhanced with tokens. And so if you look at Anthropic's gross margins as a software company, call it 50% gross margins, but it's much, much larger as a company because their opportunity is substantially larger than a software company. And so the enterprise IT industry in the future will likely be, you know, pick your favorite number, but several trillion dollars at 50% gross margins instead of $1 trillion at 90% gross margin. And so this is a great inflection point for the enterprise world. If you look at all of the enterprise software companies today, you know, pick your favorite ones, they're all going to be agentic. Every single one of them is working on agents at the moment. They're all going to be agentic. Their gross margins will be lower, but their TAM's going to be much, much higher.
