• Stocks News
• December 28, 2024

Who is the largest buyer of Nvidia's AI chips?

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The competitive race within the technology sector has taken an intriguing turn, as major corporations like Microsoft and Meta Platforms scramble for resources, specifically high-performance chips like NVIDIA's HopperRecent insights from Omdia, a prominent market research consultancy, reveal that Microsoft has firmly established itself as the leading buyer of Hopper chips, purchasing a staggering 485,000 units this year aloneThis figure dwarfs the acquisitions by its nearest competitor, Meta, which managed to secure only 224,000 units, less than half of Microsoft’s procurement.

Omdia has based its analysis on various data points, including companies' disclosed capital expenditures, server shipment volumes, and supply chain insightsThe report shines a light on other global buyers, revealing that Chinese tech giants ByteDance and Tencent have each ordered approximately 230,000 NVIDIA chips, surpassing Meta's numbers

This underscores a growing trend where companies are aggressively investing in chip technologies to bolster their AI and cloud computing capabilities.

In this landscape, two colossal players, Amazon and Google, have been making significant strides towards developing and deploying custom solutions to reduce their external supply dependenciesHowever, despite their initiatives to innovate independently, their chip purchases remain substantialAmazon has procured approximately 196,000 Hopper chips, while Google’s procurement reached around 169,000 unitsThis illustrates the irreplaceable value and performance advantages that the Hopper chips provide in today’s tech applications.

Interestingly, some unexpected dynamics have emerged from the procurement patterns of companies like Tesla and xAI, which are led by high-profile entrepreneur Elon MuskReports indicate that their combined chip purchases have slightly outpaced those of Amazon, reflecting a robust demand for high-performance chips as they continue to explore advancements in AI and autonomous technologies

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The implications of these purchases are profound, hinting at significant potential innovations and strategic plans related to emerging technologies in AI and automated driving solutions.

In an enlightening conversation during a recent earnings call, NVIDIA's CEO Jensen Huang addressed the current market landscapeHe acknowledged the immense demand for NVIDIA’s products, specifically emphasizing that despite the anticipation surrounding the forthcoming Blackwell chips, the Hopper architecture continues to reign supreme for the time beingHuang noted that key developers have recognized and are heavily reliant on the Hopper chips during pre-training, post-training, and inference processesThe impressive computing capacity and efficient data processing of Hopper chips enable swift handling of vast amounts of training data, facilitating the creation of robust, precise models with profound semantic understanding.

Moreover, when it comes to inference, which is critical for real-world applications and outputs, Hopper chips display remarkable responsiveness and efficiency

This dynamic is crucial for various industries that depend on reliable AI technology, as they strive to deliver swift, high-quality results amid complex and evolving practical demandsSince the debut of ChatGPT two years ago, a monumental investment frenzy has engulfed the tech industry, with companies pouring billions into building AI infrastructureConsequently, NVIDIA's chips have emerged as one of Silicon Valley's hottest commodities.

Huang has often remarked on the fervent demand for NVIDIA's offerings, describing a marketplace where “everyone wants to be the first to get their hands on the products.” This sentiment is reflected in NVIDIA's third-quarter revenue, which has surged 94% year-over-year, with net income soaring by 109%. Such staggering growth metrics highlight the centrality of advanced chips in driving technological advancements and fostering competition.

Among tech firms, Microsoft stands out for its aggressive investment approach towards building infrastructure capable of supporting AI services like Copilot and providing cloud computing power through its Azure division

Omdia suggests that Microsoft’s chip orders for 2024 could triple the quantities procured in 2023, demonstrating their ambitions in the AI spaceAlistair Speirs, a senior Azure executive at Microsoft, explained that crafting an effective data center infrastructure is inherently complex and requires extensive planning and significant capital investment.

Speirs also stressed the importance of forecasting growth while allowing for flexibilityOmdia estimates that global technology expenditure on servers will reach an astonishing $229 billion in 2024, with Microsoft contributing approximately $31 billion and Amazon close behind at $26 billionOmdia's Vlad Galabov noted that nearly 43% of server spending will flow toward NVIDIA, suggesting that while NVIDIA dominates this sector, the growth in its GPU market shares might be approaching its zenith.

While NVIDIA retains its strong foothold, its primary competitor, AMD, continues to gain traction, as revealed by Omdia’s findings indicating that Meta acquired 173,000 AMD MI300 chips this year, while Microsoft purchased 96,000 units