NVIDIA, Google, OpenAI turn to 'synthetic data' factories to train AI models

NVIDIA, computer graphics card company (NVDA), Alphabet's google (GOOGL) and hot startup OpenAI are turning to "synthetic data" factories to meet the massive data requirements for training deep-learning artificial intelligence algorithms. At the Consumer Electronics Show this week, the chipmaker's CEO touted the ability to synthesize data, which could be good for NVIDIA stock.

The trend toward synthetic data is emerging amid reports that AI companies are running out of real-world data needed to train powerful AI models.

"Synthetic data offers a critical solution to address scarce or sensitive data needs. This trend is accelerating as major AI companies deplete available internet data that can be used for training," said data scientist Ben Lorica in the 2025 Outlook report.

"Teams can already generate synthetic data for specific use cases using base models, while larger organizations may be able to combine synthetic data with their proprietary datasets," added Lorica, who edits the Gradient Flow AI newsletter. "Look for improved synthetic data generation tools to emerge from major AI labs to make this technology more accessible to practitioners."

At CES 2025, NVIDIA CEO Jen-Hsun Huang touted the future role of AI in automotive and robotics applications. Synthetic data will help, he said.

NVIDIA stock: the "data factory"

"NVIDIA is collecting and organizing traditional data and using it to create synthetic data," said economist Ed Yardeni in a report on progress at CES. "Both traditional and synthetic data will be used to train AI agents and bots in NVIDIA's data factories."

Yardeni added, "[The chipmaker] has made it easier for Nvidia by making the Cosmos Watching 20 million hours of video about nature, humans, and anything related to the physical world developed Nvidia Cosmos. based on these real-world scenarios, it can also create synthetic data to create even more scenarios. It can then use its real and synthetic data to train robots that need to navigate through the world, whether working in a warehouse or driving a self-driving car."

Google's cloud computing division is also pushing hard for synthetic data for enterprise applications. In addition, OpenAI's latest base model with enhanced reasoning capabilities uses synthetic data generation techniques.

A big debate heading into 2025 is whether AI models have begun to plateau due to the difficulty of accessing high-quality, artificially produced training data. In addition, companies like Google and Meta Platforms (META) Tech giants like META have internal proprietary data from YouTube, Maps, Instagram and Facebook that can be used to build larger models.

Meanwhile, NVIDIA stock is up 4% in 2025. after soaring 2,39% in 2023, NVIDIA stock is up 1,71% in 2024.