Nvidia Stock Jumps As Microsoft’s Chip Orders Outpace Rivals: Retail Ignores Google Threat

Nvidia’s shares were up nearly 3% in premarket trade on Wednesday after reports that Microsoft bought twice as many Nvidia chips than any other tech company, lifting retail sentiment. 

If premarket gains hold, the semiconductor giant could break its four-day losing streak.

On Stocktwits, it was the top trending ticker as retail celebrated the company’s potential rebound at market open. 

Technology consultancy Omdia estimates that Microsoft bought 485,000 of Nvidia’s Hopper chips this year — more than double the 224,000 procured by Facebook-Parent Meta, Nvidia’s next biggest customer – according to a report by the Financial Times. 

Amazon and Google bought 196,000 and 169,000 Hopper chips, respectively, the analysts said.

However, Omdia’s latest research also highlights that the rapid growth in demand for Google’s Tensor Processing Unit (TPU) AI chips could threaten Nvidia’s market dominance in GPUs.

It believes Broadcom’s AI semiconductor revenue target of $12 billion, which includes making custom chips for Google, Meta, and other AI players, provides insight into purchasing trends. 

“Even though there is some uncertainty in the exact ratio between compute and networking devices, shipments of TPUs, even at the lower $6 billion estimate, are growing at a pace fast enough to take share from NVIDIA for the first time,” stated Alexander Harrowell, Principal Analyst at Omdia.

Harrowell estimates Google’s TPUs could account for $6 billion to $9 billion of Broadcom’s AI revenue, signaling the growing importance of these chips in AI infrastructure.

“This figure includes a substantial number of Meta’s MTIA chips, with a project for a mysterious third client expected to ramp up in 2025,” the report said.

Nvidia Sentiment and Message Volume on Dec 17 as of 7:30 a.m. ET | Source: Stocktwits

Retail sentiment around the stock jumped to ‘extremely bullish’ from ‘bullish’ a day ago, as chatter remained at ‘high’ levels. 

Over the last two years, demand has outstripped supply of Nvidia’s most advanced graphics processing units, giving Microsoft’s chip hoard an edge in the race to build the next generation of AI systems.

A chip hoard that, according to hedge fund manager Doug Kass, could mean less demand for Nvidia’s chips down the line. 

Kass cautioned that Microsoft CEO Satya Nadella's recent comments about easing chip shortages could signal slowing demand for Nvidia's processors.

Now rolling out its next-generation Blackwell chip, Nvidia has seen its valuation soar to over $3 trillion this year. 

However, concerns over slowing growth, competition from custom AI chips, and geopolitical risks tied to U.S.-China relations have weighed on the stock over the past few months. 

Citi analyst Atif Malik reiterated a ‘Buy’ rating with a price target of $175.00 on Nvidia.

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Read also: Nvidia Slides Further As Microsoft Signals Shift From AI Chip Shortages: Retail Waiting On Rebound