Nvidia’s stock went up early Friday, even though some of its biggest cloud customers are speeding up efforts to make their own AI chips.
Nvidia’s shares rose over 2% in early trading, despite a Reuters report that Meta Platforms plans to start making its own AI chip in September. Meta did not reply to requests for comment.
Meta has already released several versions of its own chips, which the company says could eventually play a bigger part in AI training, a field still led by graphics processing units. So far, custom chips from big cloud companies have mostly been used for inference, which is when trained models produce results, rather than for training. Analysts say Meta’s in-house chips are meant to add to, not replace, its ongoing purchases from Nvidia and Advanced Micro Devices.
Benchmark Research analyst Cody Acree said that even if Nvidia’s share of Meta’s chip spending drops as Meta grows its custom chip program, overall spending by big cloud companies is expected to more than double. This means Nvidia’s total revenue from these customers should still increase.
A bigger challenge for Nvidia could come from Google and Amazon, which are starting to sell their own AI chips to other companies. Google’s Tensor Processing Units and Amazon’s Trainium chips can run top AI models and, in some cases, may be more cost-effective than Nvidia’s products.
Investors are also watching for signals from Meta and other major cloud operators, and are looking for updates from Meta and other big cloud companies during the upcoming earnings season. What these companies say about AI spending and their own chip plans could influence market sentiment.
