Nvidia co-founder and CEO Jensen Huang demonstrated the new Blackwell GPU chip at the Nvidia GPU Technology Conference on March 18, 2024.
David Paul Morris/Bloomberg via Getty Images
Nvidia Shares rose more than 11% on Wednesday after comments from top customer Microsoft and rival chipmakers AMD It suggests that the multi-billion-dollar construction of GPU-based artificial intelligence servers will not slow down.
Microsoft Chief Executive Satya Nadella and Chief Financial Officer Amy Hood said on Tuesday that the company plans to invest more in Nvidia-based infrastructure next year.
Microsoft’s capital expenditures in the fourth fiscal quarter were US$19 billion, of which approximately 60% was spent on hardware. The tech giant also said it is seeing a return on investment from expensive GPU-based servers.
The company’s comments on the earnings call eased investor concerns that growth in Nvidia’s artificial intelligence sales and an arms race among cloud providers could slow.
UBS analyst Karl Keirstead wrote in a note on Wednesday that Microsoft’s earnings report “will likely encourage most Nvidia/semi investors as Microsoft’s capital expenditures for the quarter hit $19 billion, well above expectations.” .
Nvidia is a major beneficiary of the artificial intelligence boom. Its shares have doubled so far in 2024, and are up more than 500% since the release of ChatGPT in November 2022 sparked strong investor interest in artificial intelligence technology.
Morgan Stanley analysts ranked Nvidia as a “top pick” in a report on Wednesday and said concerns including competitive dynamics, export controls and supply chains are likely to “fading over time.”
“We believe the market is half-empty on some of the hyperscale comments, with clients clearly wanting to continue devoting resources to developing multi-modal generative AI,” Morgan Stanley analysts wrote.
Moore also emphasized that Nvidia’s chips are transitioning from the previous generation of “Hopper” or H100 series chips to a new generation of chips called Blackwell, which may stimulate additional sales.
“Our inspections generally indicate that customers want to deploy GPUs as soon as possible, and the H100’s resiliency, even weeks after Blackwell delivered it to us, makes these spending concerns seem premature,” Moore wrote.
Top competitors improve AI forecasts
AMDNvidia’s main rival in the data center GPU market reported better-than-expected sales and earnings on Tuesday and told investors that demand for its GPUs remains strong.
AMD CEO Lisa Su said the company expects AI chip sales to reach $4.5 billion this year, an 11% increase from previous guidance.
Goldman Sachs analysts said the data points from Microsoft and AMD contradict growing concerns among investors that a handful of cloud providers and big tech companies are spending too much on Nvidia chips and building too much infrastructure too quickly.
Goldman Sachs analyst Toshiya Hari said in a report on Wednesday, “We believe AMD’s positive data center GPU business outlook and Microsoft’s remarks that capital expenditures will continue to increase in FY25 bode well for Nvidia.”
Nvidia is expected to report fiscal second-quarter earnings in August.
Correction: Microsoft CEO Satya Nadella and Finance Chief Amy Hood announced the company’s Nvidia spending plans on Tuesday. An earlier version incorrectly described the day.
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