The price of a server like the ones pictured can reach nearly $9 million — and it spells very bad news for some of the world's largest server manufacturers.
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This rack is the NVL144, NVIDIA's new AI server expected to enter service with major cloud providers by late 2026. It is also known as Vera Rubin — Vera referring to the CPUs it contains, and Rubin to the GPUs.
What makes it so expensive from a technical standpoint is the concentration of the best hardware money can buy in the AI space. Beyond the processors, it includes advanced memory components, storage, ultra-fast optical interconnects, and switching components (the switching components were developed by Israeli company Mellanox, which NVIDIA acquired years ago).
Every major cloud giant is lining up to purchase these servers in order to stay relevant in a world where demand for compute power is only growing. Any company that fails to equip itself in time with the cutting edge of technology will fall behind and lose customers to its competitors.
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But the bigger story is something else entirely.
In the old days, NVIDIA would manufacture the graphics cards, and companies like Dell and HPE would purchase them alongside a long list of other components, then design and assemble servers under their own branding.
NVIDIA's AI servers are different: NVIDIA controls the entire supply chain. It designs the server from the processor all the way down to the liquid cooling system, and manufactures the various components through a network of sub-suppliers. This means that traditional server companies do little more than assemble the server according to pre-written instructions — and it ships as an NVIDIA-branded product.
The profit margins of these manufacturers are shrinking as their role in creating the final product diminishes. Looking ahead, it appears that NVIDIA is aiming to cut them out of the equation entirely — to become a company that not only sources all the components and designs the server, but also controls its assembly and sells it directly to customers.
NVIDIA reached a $5 trillion market cap through sustained margin expansion and the absorption of smaller hardware suppliers. A concrete example is the acquisition of Groq and the integration of its LPU processors into the new server.
If this trend continues, it will lead to the elimination of the traditional server company's market segment — and it's possible that even $5 trillion won't hold the record as the highest market cap ever reached by a single company.
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👋 Hi, I'm Shlomo Strauss — follow me for more content on science and technology.