The massive GPU short and CrowdStrike’s path ahead

It was one other big week for theCUBE, including the soft launch of theCUBE’s east studio on 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 massive GPU short refers back to the 2015 film “The Big Short,” which focused on Wall Street guru Michael Burry calling the housing market crash. There’s something similar occurring without delay with GPU, in accordance with Furrier.

“I talked to quite a lot of people. They will’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 so they won’t sell it to them because there’s every kind of stuff. So, an enormous thing.”

The massive GPU short and its implications

There is perhaps all styles of people grabbing all of the GPUs and sitting on them, in accordance with Furrier. That may lead to a crash, which Furrier dubbed the “big GPU short.”

“You’re beginning to see that if this becomes an issue, then that might just gut the market out. It could crash. The GPU market could crash, and it’s very very like a housing crisis sort of vibe,” Furrier said. “That may kill the CoreWeaves of the world and the best way they’re purchasing the GPUs.”

There may eventually be an overcapacity in GPUs, nevertheless it isn’t more likely to occur within the near term, in accordance with Vellante. The CapEx build-out is continuous.

“In case you just have a look at the CapEx of the large hyperscalers, plus Meta, they’re constructing out huge data centers. They’re buying GPUs hand over fist, and so that they’re continuing that CapEx buildout,” Vellante said. “Straight away, enterprise AI is, like I at all times say, it’s very chatty. They’re hitting singles. They’re probably not doing the large heavy work.”

The cloud guys are currently attempting to compete with each other in an arms race, in accordance with Vellante. If it doesn’t eventually repay, there shall be a crash.

“However it’s not coming, I don’t think, anytime soon, because there’s still GPU shortages. Enterprises who’re hitting singles want to start out investing in greater projects,” he said. “What they’re doing is that they’re going to the CoreWeaves, they’re going to the Bedrocks, from Amazon and Google, and buying GPUs from those guys.”

The demand continues to be there, and there’s pent-up demand within the enterprise, in accordance with Vellante. For that reason, the gig GPU short won’t occur this 12 months.

“I don’t see it happening this 12 months. I feel you may be right, but I feel it’ll occur after Blackwell starts shipping, and there’s perhaps a glut of H100s and H200s and Hoppers,” Vellante said.

VMware Explore set to kick off

TheCUBE shall be on the bottom in Las Vegas for up-to-the-minute coverage of VMware Explore 2024 Aug. 26-28. Last week, the most recent edition of Vellante’s Breaking Evaluation series focused on assessing Broadcom Inc.’s acquisition of VMware, eight months on.

Enterprise Technology Research data conducted upfront of VMware Explore was very revealing. There have been two points to explore within the recent post, in accordance with 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 definitely excellent 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 shouldn’t be a straightforward calculation for corporations, in accordance with Vellante.

“The underside line, my takeaway is, there’s no doubt it impacted last quarter. The numbers usually are not going to be good. There’s no doubt in my mind that George Kurtz goes to be transparent and humble, and he’s going to reset his ARR forecast,” Vellante said. “They’re going to start out build up again from there.”

The stock has been acting nicely recently, in accordance with Vellante. The message moving forward will likely be considered one of a must reset, to apologize and to set a course ahead.

“I feel there’s exposures when it comes to what they’re offering people. They’re still negotiating. There’s one query in here, ‘What have they offered you?’ Discounts. They’re offering us, perhaps direct compensation discount on renewal, direct compensation, more favorable terms, and 50% say, ‘We’re still negotiating,’” Vellante said. “The following several quarters are going to be a reset for CrowdStrike.”

Watch the complete podcast below to seek out out why these industry pros were mentioned:

Michael Burry, American investor
Mike Lynch, founding father of Invoke Capital
Leo Apotheker, former CEO at HPE
Lina Khan, chair of the FTC
Kamala Harris, forty ninth United States vp
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, forty fifth U.S. president
Ronald Reagan, fortieth 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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Photo: SiliconANGLE