Head out of the cloud: Nvidia’s personal-computer shift

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The Economist. Hello and welcome to the intelligence from The Economist. I'm Jason Palmer.

Today on the show, the World. wildly different contenders for Los Angeles mayor and Loram Ipsom text for the corporate world. The world's most valuable listed company is having a hell of a year, again. In March, InVIDIA announced new chips in AI models and ambitions for space-based data centers, even self-driving cars. But yesterday, Jensen Huang, the firm's leather-jacketed boss, shared what he said was far bigger news. There is no question this reinvention of the computer is as big of a deal as the reinvention of the phone into what we now know as the smartphone.

Our global business writer Shailash Chitnes was in the room. I'm in Taipei this week attending the Compuitex Conference. which is a big conference for AI and semiconductors in Taiwan. During a keynote speech, Jensen Huang brought out two laptops in his hand. And basically that signified that in partnership with Microsoft, they have developed chips specifically for the personal computers. So it's a big break for Nvidia from what they're known for, which is making chips for AI in the data center.

This is now getting into the personal computer. So I think it was a big announcement in terms of what it signals for Nvidia's ambitions. Well, let's start with why they want to do that in the first place. I mean, most people experience AI as essentially as a cloud service. What is the point of putting it on a computer and having it local? I would say there are two reasons for this. The first is the rise of agentic AI, which is basically AI systems which perform pretty complicated tasks themselves. So maybe the simplest example always given is booking your travel reservation or doing certain things.

The agent itself goes out and completes those tasks. The rise of Agentic AI has made central processing unit, which is a type of chip that is used predominantly in personal computers, very, very important because those are the kind of chips that are able to actually orchestrate these actions. Remember, Nvidia is known for making graphic processing units or GPUs. These are chips that are purpose built for training as well as running large language models. But as AI is moving into what is known as inference, where a model response to user query, more and more CPUs are starting to become important. And if I'm a user trying to use these agents, every time going to the cloud and running these things can be slow.

It can also be expensive. Everybody is heard of people burning through their token budgets and things like that. If you're actually able to run these agents on your own laptop or personal computer, you can do it perhaps faster, but you can also do it cheaper. So that's kind of the driving force. It's basically the evolution of AI towards being more useful and getting into more applications, that has driven the need for this type of a solution. And so the bet is that at least the street level consumer use of AI is going to be mostly

that. The agentic stuff run locally, on your own, no tokens spent. Exactly. Now, I think what will eventually probably end up happening is it's going to be a combination of some stuff run locally, some stuff going to the cloud. But even if you have a laptop that is actually able to make those decisions and understand what you do locally versus what you send to the cloud, that becomes. a big plus versus today when most of us are using either cloud or chat GPT,

all of that is running on their cloud. So this actually opens up a lot more options. From a consumer point of view, as much as this interesting stuff might be going on under the bonnet, the experience of agenic AI will look the same for the average person, or does it become different if it is built-in Nvidia inside? Yeah, so during the keynote, Jensen Huang actually had a good analogy, which I'll repeat here. He said that after smartphones, people use their phones for everything other than phones.

phone calls. And so he sees a very similar future with the personal computer as well, which is something that will do a lot of tasks for us. So today, we do a lot of things on the personal computer. We initiate the actions and things like that. The future could be one where the computer does a lot of things for us and it's a machine that's running on its own making decisions. So he envisions a very different kind of PC than what we have seen over the past 40 years. And that's the reason he thinks it needs a completely new kind of chip. And presumably, Nvidia is not the only company seeing the future. this way. I think everybody in the industry agrees that the way the user experience on the personal computer or quote unquote the edge as it's called in the jargon, it's going to be very different

from what it was previously because of AI. The challenge is I don't think everybody has a firm view of what that future looks like. But I think everybody agrees it's not going to look like what it is today, which is you open up your browser, answer emails, open a spreadsheet, things like that. I think a lot more autonomy, a lot more agents running independently. All that is going to happen for sure. think the industry as a whole is making that bet, or you think Nvidia is going out on a limb at some degree? Well, this is a tricky question because different chip makers have different views on what they call an AI chip.

I would say Intel, AMD, they've all been making moves in this space. What Nvidia has shown is what they call, again, quote-unquote, a super chip is a combination of a GPU and a CPU that they say is purpose built for this kind of a workload. It still remains to be seen. We've just seen the announcement. We don't know the specs and all these other things. So it's hard to compare like for like. but it's safe to say that most chip makers from Intel, AMD, Qualcomm, and now Nvidia,

they are actually making the moves in the space. Now, it's clear that Nvidia has really become the market leader for GPUs. Do you think that they have what it takes, that they're doing what it will take to be a market leader when it comes to these local AI chips? It would be foolish to underestimate Nvidia in anything they do. Having said that there are a couple of differences this time around. So, Nvidia was always dominant in making graphics processor units when it became. came really useful for AI.

In this case, actually, Intel and AMD are the true strong incumbents. Even Apple, which makes its own chips, has been doing that for a long time. So, Nvidia is actually coming into this market new, which creates its own sets of challenges. Also, in this case, if you remember, one of Nvidia's modes has always been the way it's hardware and software, which is Kuda, work together. Well, here, Nvidia needs to work with Microsoft. It's a very different beast in terms of having an operating system. chip working together. How they actually do that remains to be seen, but it's not easy to say

that these strengths in GPUs are going to translate into CPU that easily. Shailash, thank you very much for your time. Thank you for having me. Hi, this is Elise Huve from TED Talks Daily, and this episode is brought you by Ambetter Health. For many employers and brokers, group health insurance means unpredictable costs and plans that try to fit everyone but end up fitting no one. A model called ICRA is changing that. Employers set a fixed contribution. Employees pick the health plan that works for them, their family, their doctors, their budget. Predictable for the business, personal for the people. That's a better kind of coverage. Get coverage you control. Find out if an ICRA is right for you.

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When my city is threatened, I will fight. I clash with Trump's ICE agents and Angelina. Today is primary day in Los Angeles. Aaron Braun is our West Coast correspondent. One of the big elections everybody's got their eye on is the mayor's race in L.A. And there are three top contenders, but the incumbent mayor is Karen Bass and she's a Democrat. I achieved the first two-year drop in homelessness ever. But Bass is increasingly unpopular.

A poll done in March found that 56% of Angelinos viewed her unfavorably. That's a lot. So that opened the door for two very different contenders to challenge her to become mayor of Los Angeles. We can bring L.A. back to what it really is. Tabass's left is Nithya Raman. She's a council member who's affiliated with the Democratic Socialists of America. Every single vote matters on June 2nd because this city's future is absolutely worth fighting for. And Tabass's right is a reality TV star that some of you might remember from the show called The Hills.

Business as usual is a death sentence for Los Angeles. And I'm done waiting for someone to take one. real action. Spencer Pratt is a registered Republican whose home burned down in the Palisades Fire last year. That's why I am running for mayor. And let... If no candidate gets over 50% in this primary, which they won't, the two top finishers will advance to the general election in November. And right now, polling suggests the three candidates are neck and neck. And what's on voters' minds? What are the conditions in L.A. that they're looking to improve? There's a lot of malaise and anger, Jason, in L.A. right now.

I think Spencer Pratt wouldn't be gaining momentum if things were going well. Last year, L.A. lost more people than it gained, even while other big cities in California are starting to recover from that COVID-era population decline. In 2024, the median sale price of a single-family home was about 11 times higher than median household income. Hollywood is contracting film and TV production is declining in LA that's costing the city a lot of jobs. And then the mayor has had to plug some pretty hefty budget deficits. When the city repaves streets, it often has to make upgrades to wheelchair ramps on sidewalks that cost about $50,000. So instead of doing that, the city for nine months just simply stopped repaving streets. So how does Karen Bass propose?

to fix all of that. What's her pitch? Well, the interesting thing is she's not arguing that things are going well. I remember L.A. when L.A. was affordable. I remember that. But when I became mayor, it's like, oh, my goodness, I inherited a hot mess. Her mean pitch is basically that something is broken in L.A. That the system is rotten and that she's made some progress in her term towards fixing that.

And so we are beginning to turn things around. But the bottom line is, I'm not finished. We've reduced. So her pitch is essentially that things aren't good, but that she has made them better than they'd otherwise be. Yeah, exactly. But I think that's a really hard pitch to make. L.A. is notorious for its big homelessness problem.

Her signature program in her first term, Inside Safe, moves homeless people out of encampments and into shelters. It's very expensive. But it's been somewhat effective. The number of people sleeping outside has declined about 18%. in the last couple of years, but there's still 27,000 people sleeping on the street. So it's progress, but it still feels like this overwhelming problem. What does Spencer Pratt bring to the platform?

Mr. Pratt's campaign is basically a big tent for anyone angry about anything in Los Angeles. He was interviewed by Joe Rogan recently. There's just naked people everywhere now. And when I say people, naked zombies. And the DEA will tell you, 90% of these homeless people, People have a drug problem. We have a drug. He blames Karen Bass personally for his home burning down in the fires last year.

The state and local leaders let us burn. He honed his political chops on reality TV. He's a very effective messenger. His campaign, I think, practices a sort of hyper-local version of Trumpian grievance politics. Now, my producer has sent me a. couple of campaign ads. Please, I'm begging you. There's homeless drug addicts in front of the schools.

My children aren't safe. AI-driven fever, dream stuff. You say he's a good messenger, I suppose, in this crazy era he is. Yeah, I mean, he knows how to use social media. We should say these ads are made by fans of his, and he will retweet them, but they're not actually made by his campaign. There's one in particular that I sort of can't look away from. And it portrays Karen Bass as the Joker in Batman, kind of holding court in a courtroom.

Gavin Newsom is a courtier eating cake. Kamala Harris is swinging from a bottle of vodka in the corner. And then Pratt shows up as Batman and him and a crowd of Angelino's pelt those Democrats with tomatoes.

I've never seen political ads like this before. And they're gripping and also horrifying at the same time. Which brings us then to the other contender on the ticket then. Tell me about her. I met Nithya Raman recently at a coffee shop in Silver Lake in her council district. And she told me about how she would use her position as mayor differently. People talk about L.A. as having a weak mayor. It is by choice.

It's because this mayor has not chosen to use her power to push us forward. I want to use it. She has been the fiscal hawk in the race arguing against big raises for the police union and exorbitant spending on a new convention center. She also thought Spencer Pratt's governing philosophy could be dangerous. He's not a joke. As much as I would like to think that he is, he is not a joke. He represents a version of politics that is fundamentally at odds with Los Angeles and what this city represents. And so for people disenchanted with the mayor and kind of scared of Spencer Pratt, she would be the natural choice.

So from what you're saying, if this is a neck-and-neck race, Spencer Pratt is in fact not a joke. People might want his brand of politics. He's not a joke. He's proven to be a really effective campaigner. And I think these three candidates do have distinct constituencies for the most part. Spencer Pratt will attract Republicans and independents and disaffected Democrats. Karen Bass is very much the establishment Democrat candidate Nithya Raman will attract voters to her left. But I do think people are underestimating the extent that the malaise and the anger in Los Angeles is scrambling political tribes.

Pratt has run a surprisingly nonpartisan campaign despite him being a registered Republican. He's talking about L.A. issues. He's not talking about Donald. Trump. But I will say even if he makes it through to the runoff, which would be a remarkable feat, Los Angeles County is only about 19% registered Republicans. The city will be even less red than that. So it will be a very big lift for Spencer Pratt to become mayor of Los Angeles. Erin, thanks very much for your time. Thank you, Jason.

Moving up the ballot paper a bit, today is also the day for Californians to vote in primary elections for governor. It is a ferocious battle. My colleagues over on Checks and Balance, our subscriber-only sister show on American Politics, have been following it for their latest episode. Policy decisions made in America's most populous state can ripple across the rest of the country.

So what does California's governor race mean for the future of the state and for national politics? Have a hunt for checks and balance wherever fine podcasts are sold and traded.

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