AI Hardware

Nvidia shares soar 13% after Microsoft quells fears that AI buildout is too fast

Nvidia shares popped 13% after remarks from top customer Microsoft and rival chipmaker AMD signaled there wouldn’t be a slowdown in the multibillion-dollar buildout of AI servers based around GPUs.

By Priya Khosla August 1, 2024

Source: CNBC

Microsoft spent $19 billion on capital expenditures during the fiscal fourth quarter, with about 60% on hardware. The tech giant also suggested it’s seeing a return on investment from its expensive GPU-based servers.

Microsoft’s earnings report “may encourage most Nvidia/semis investors, as Microsoft’s capex came in much hotter-than-expected at $19 billion in the quarter,” UBS analyst Karl Keirstead wrote in a note.

Nvidia has been the primary beneficiary of the AI boom. Its stock has doubled so far in 2024 and is up more than 500% since ChatGPT’s release in November 2022 kicked off intense investor interest in artificial intelligence technology.

AMD, Nvidia’s primary rival in the market for data center GPUs, reported better-than-expected sales and earnings on and told investors that demand for its GPU remains strong.

AMD CEO Lisa Su said the company expected $4.5 billion in AI chip sales this year, an 11% increase over its previous guidance.

Goldman Sachs analysts suggest Microsoft and AMD’s data points contradict rising investor anxiety that a handful of cloud providers and big technology companies are overspending on Nvidia chips and building too much infrastructure too quickly.

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