Nvidia flexes its data-center power

Welcome to Runtime! Today: Nvidia makes a big deal with Intel to cement its interconnect technology in the data center, Microsoft dodges a scary security incident, and the latest enterprise moves.

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The missing NVLink

Until very recently, Intel was the most influential presence inside the massive data centers that run the world's economy. At one point it enjoyed more than 90% of the market for the CPUs that powered those data centers, but manufacturing stumbles and the stunning rise of a new type of data-center workload built around AI threatened to turn Intel into a data-center afterthought.

Nvidia might have picked Intel up off the mat Thursday with a historic deal that will see the two companies collaborate on "multiple generations of custom data center and PC products" over the next several years, they said in a press release. "This partnership is a recognition that computing has fundamentally changed," said Nvidia CEO Jensen Huang on a conference call.

As part of the deal, Nvidia will invest $5 billion into Intel, which sent the company's stock up more than 22% Thursday.
In exchange for that investment, Intel said it would build custom CPUs for Nvidia to package with its GPUs and sell to data-center customers.
Depending on how those chips compare to Intel's off-the-shelf components it sells to cloud providers and data-center operators, the deal could turn Nvidia into a much larger provider of not just GPUs, but complete systems to those customers.
And Nvidia will also use Intel's chip-packaging technology to assemble the data-center components, a small boost for its fledgling foundry business.

The key to the deal is Nvidia's NVLink technology, a proprietary chip-to-chip communications protocol that will now become a big part of the blueprint for Intel's data-center chips. NVLink is much faster and can work with a larger number of GPUs than PCIe, the cheaper, general-purpose interconnect technology used by Intel and AMD.

Nvidia uses NVLink to connect GPUs like Blackwell with its own custom Arm CPUs, but despite Intel's recent troubles its CPUs are still widely used across enterprise tech.
Bringing NVLink to Intel's x86 server processors should allow companies that still want to run software written for x86 chips — an enormous amount of the world's active software — to scale their AI workloads more effectively than possible when using PCIe to connect to Nvidia's GPUs.
The deal is also an acknowledgment that enterprise customers are probably less interested in buying all their data-center components from Nvidia than it might have hoped a few years ago.
And it's a problem for AMD, which has been making inroads in the data center with its own components but could find itself at a performance disadvantage without a similar deal.

Nvidia is now the clear power broker in the data center, which is a stunning development to anyone first introduced to the company decades ago as a hardcore PC gamer. The New York Times reported Thursday that the Trump administration, which took a 10% stake in Intel earlier this year, asked Huang to invest in the company right around the time it came back into power in January.

The big unanswered question from Thursday's press conference is whether Nvidia will double down on its investment in Intel by breaking away from TSMC to use Intel's foundry services not just for packaging, but to build its crown jewels.
That would move a significant amount of semiconductor production to the U.S., but Nvidia likely needs greater assurances that Intel's manufacturing technology is as good as the gold standard set by TSMC over the last decade.
However, even if Nvidia remains TSMC's most important customer over the rest of the decade, it just gave Intel a pathway toward stabilizing its shaky enterprise business; this time, on Nvidia's terms.

Root cause

Microsoft's enterprise sign-on technology — once known as Active Directory and now called Entra ID so someone in marketing could get a promotion — has been at the center of many of its security problems over the last several years, including the massive Chinese hack of government accounts that led it to create the Secure Future Initiative last year. According to a security researcher, Microsoft still has some work to do when it comes to locking down Entra ID.

Earlier this year security researcher Dirk-jan Mollema discovered two vulnerabilities in Entra ID that could allow anyone "to gain global administrator privileges — essentially god mode — and compromise every Entra ID directory, or what is known as a 'tenant,'" as reported by Wired. Mollema reported the vulnerabilities to Microsoft the same day he discovered them and the company developed a fix three days later, with no compromises of Entra ID systems reported to date.

"The Microsoft Entra ID Actor token exploit is one of the most severe identity vulnerabilities uncovered in the cloud era," cloud security company Mitiga said in a blog post. It appears Microsoft and its customers got lucky this time, but Mitiga said given the nature of the exploit it would be extremely difficult to detect an intrusion.

Enterprise moves

Doug Recker is the new president of Duos Technology Group, after serving as president of the industrial data-center technology company's Duos Edge AI subsidiary for the last year.

Pallavi Mahajan is the new chief technology & AI officer at Nokia, joining the company to lead a new business unit focused on networking for AI data centers after several years at Intel, HPE, and Juniper in technology leadership roles.

Aniket Menon and Thanos Karpouzis are the new chief product officer and chief technology officer, respectively, at Immersive.

Phil Mottram is the new executive vice president and chief sales officer at HPE, following several years in sales and technology leadership roles at the company.

The Runtime roundup

Netskope was valued at $8.8 billion after its initial public offering Thursday, raising over $900 million for its secure access services edge (SASE) technology.

Atlassian acquired DX, a developer productivity company focused on addressing that important metric with a product "that didn’t make developers feel like they were being surveilled," for $1 billion, according to TechCrunch.

Cloudflare and Microsoft announced they had disrupted the actions of a phishing-as-a-service group that sold kits designed to steal Microsoft 365 credentials.

Thanks for reading — see you Saturday!