Nvidia eyes data center Ethernet as its next multi-billion-dollar biz

  • Nvidia is planning a push into the data center Ethernet networking market
  • CFO Colette Kress said Spectrum-X Ethernet-based networking solution is “well on track"
  • It already has a multi-billion-dollar play: its Ethernet NIC product but Spectrum-X includes much more

Cisco, Arista and DriveNets might want to batten down the hatches. It seems artificial intelligence GPU giant Nvidia is planning to go hard in the data center Ethernet networking market.

In fact, during Nvidia’s recent earnings call, CFO Colette Kress said the Spectrum-X Ethernet-based networking solution it launched in May 2023 is “well on track to begin a multi-billion-dollar product line within a year.” And, for what it's worth, the company also just joined the Ultra Ethernet Consortium

Alan Weckel, 650 Group co-founder and analyst, told Fierce Nvidia is no stranger to the Ethernet market. It already has a multi-billion-dollar play in this space in the form of its Ethernet NIC product.

But the full Spectrum-X platform includes much more: switches, optics, cables and network interface cards (NICs).

With Spectrum-X, Nvidia is competing with Arista, Cisco, DriveNets and Juniper on a system level and Broadcom, Marvell and Cisco on the ASIC side of things. And now, Nvidia is ramping platform adoption among tier-2 cloud providers and in bundled solutions. Indeed, Kress said during the call that “hundreds of customers have already adopted the platform.”

“In many cases, it replaces what would have been an InfiniBand switch,” Weckel said of Spectrum-X via email. “At a market level, Nvidia will self-cannibalize some of the InfiniBand market (won’t go to 0) and gain share in Data Center switching (both back-end and front-end).”

An Infiniband pivot

Nvidia has historically pushed its version of Infiniband for networking. But it seems to have pivoted once hyperscalers – no doubt egged on by the likes of Arista, Cisco and DriveNetsmade their preference for Ethernet clear. In November 2023, Nvidia said it would work with Dell Technologies, Hewlett Packard Enterprise and Lenovo to incorporate Spectrum-X capabilities into their servers.

Kress noted during the call that Nvidia plans to “launch new Spectrum-X products every year to support demand for scaling compute clusters from tens of thousands of GPUs today to millions of DPUs in the near future.”

Dell’Oro Group VP Sameh Boujelbene told Fierce that “Nvidia is positioning Spectrum-X for AI back-end network deployments as an alternative fabric to InfiniBand. While InfiniBand currently dominates AI back-end networks with over 80% market share, Ethernet switches optimized for AI deployments have been gaining ground very quickly.”

Boujelbene added Nvidia’s success with Spectrum-X thus far has largely been driven “by one major 100,000-GPU cluster, along with several smaller deployments by Cloud Service Providers.”

But Ethernet is expected to dominate in the long run. By 2028, Boujelbene said Dell’Oro expects Ethernet switches to surpass InfiniBand for AI in the back-end network market, with revenues exceeding $10 billion.