Jensen Huang Thinks Orbital Datacenters Have Poor Economics Right Now, Says Cooling Is The Bottleneck

Nvidia Corp. (NASDAQ:NVDA) CEO Jensen Huang shared his views on orbital data centers during the chipmaker's Q4 earnings call, outlining economic challenges associated with the phenomenon.

Poor Economics, Abundance Of Energy

During the company's earnings call with investors and analysts, Huang was asked about his views on space-based AI compute. "The economics are poor today, but it is going to improve over time," he said. He also added that space had an "abundance of energy" and "plenty of space" in orbit, outlining positive factors in the race for solar-powered AI satellites.

However, he acknowledged that there was no airflow in space, which means that "the only way to dissipate heat is through conduction," he said. He added that radiators needed for the heat dissipation were "fairly large." Space-based hardware isn't novel for the chipmaker. "MPS is already the world’s first GPU in space, Hopper is in space," Huang said.

Gene Munster Weighs In

Investor Gene Munster of Deepwater Asset Management took Huang's comments as a positive signal for the future of AI datacenters in space.

In a post on the social media platform X on Wednesday, Munster summarized Huang's views on the topic. "My take: Jensen message is orbital data centers are difficult today and worth pursuing," the investor said in the post.

Nvidia's Earnings

The chipmaker posted record revenue figures in Q4, reporting $68.13 billion, up 73% from last year’s fourth quarter and beating the Street consensus of $66 billion. Nvidia's EPS earnings of $1.62 also beat market estimates of $1.53 per share.

Elon Musk's Goal

Elon Musk has touted solar-powered AI satellites as the next step in AI compute and his goals received a major boost as SpaceX acquired Musk's artificial intelligence company xAI.

However, he has received criticism for his views, with short-seller Jim Chanos saying that space-based artificial intelligence compute was "AI snake oil" and argued that the cost of such an endeavor would far exceed the cost of ground-based datacenters on Earth.

Benzinga Edge Rankings show that Nvidia scores well on the Momentum, Growth and Quality metrics. It also boasts a positive price trend in the short, medium, and long term.

Price Action: NVDA surged 1.41% to $195.56 at Market close on Wednesday.

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