Is nvidia still the favorite? The return on investment in the GPU rental market is extremely high = Morgan Stanley.

On August 27th, a team led by Joseph Moore of Morgan Stanley stated, "The GPU rental market...The return on investment (ROI) is extremely highStillin short supply, although the rental price of H100 is declining, the absolute level of pricing suggests a payback period of less than 1 year.NVIDIA stated in the report that it is still the safest option for datacenter investors.

Even with conservative estimates,Investment in datacenters generate an internal rate of return (IRR) of 30% to 50%.However, GPU rentals are performed at lower prices outside of mainstream platforms, which may affect investors' returns.

As the number of companies building AI applications through the cloud increases, there are concerns about the market impact on communication service providers (CSP) and teri-2/3 cloud providers, which are important components of the generative AI market.

Currently, GPU rentals are divided into spot instance pricing and on-demand instance pricing. This time, Morgan Stanley validated the GPU spot instance prices in the market and several GPU supply sources such as GPUlist.ai, a third-party marketplace platform.

GPU supply exceeds demand, and the capital return rate is extremely high.
Based on data, Morgan StanleyGPU supply is still relatively tight.The demand continues to exceed the supply.As shown in the graph below, the rental price of H100 has been decreasing in the past 6 months, but the absolute level of the price suggests a very high return on investment for hardware and a payback period of less than one year.

If these spot instance prices represent the prices currently cleared by various GPU vendors, the spot hourly rental price for AWS H100 is about $4.50, which means that investing in a new 100MW datacenter can yield an IRR of 30-50% with a conservative estimate, according to Morgan Stanley.Investing in GPU rentals can yield high returns, as Morgan Stanley suggests.However, the issue lies in the fact that the price of GPU rentals is lower outside of major cloud service providers, despite the high internal rate of return on datacenter investments, according to Morgan Stanley.

Investors cannot be too optimistic in light of these findings.
According to Morgan Stanley, while the internal rate of return on datacenter investments is high, the price of GPU rentals is even lower outside of major cloud service providers.Investors cannot be excessively optimistic.That's right.

According to the data from GPUlist.ai, the marketplace for GPU computing, The median rental price per hour for the H100 is $2.27, which is more than 80% cheaper than AWS prices.Other cloud service providers, such as Paperspace, also offer similar low prices for a commitment period of three years. This can be a very attractive discount for consumers who need to rent millions of hours.

Furthermore, GPU rentals are usually associated with less software, making it easier for consumers to switch cloud services in search of the best price.