Have a good weekend, investors. How do you feel about the dependence of tech giants like $MSFT+0.3% $GOOGL-1.1% $AMZN-0.4% on artificial intelligence chips from $NVDA-0.2%?
These tech giants are progressing in developing their own chips for their data centers with AI deployment. An important example is $MSFT+0.3% 's recent investment in d-Matrix, a company that designs optimized chips to power generative AI applications. Chips that are designed specifically for the customer's needs have lower power consumption, which is a major factor in data centres as they run 24/7.
This is where I see a big risk for $NVDA-0.2%, a company that makes "general purpose" chips for AI. $AMZN-0.4% and $GOOGL-1.1% are already developing their own chips for their own needs , I think they will not depend on $NVDA-0.2% chips at all in the future.
This to me is one of the risks Nvidia may run into that may affect future growth.
It's very possible that the tech companies will make the chips themselves and won't be so dependent on Nvidia.
That's exactly what I meant to say, only now it's been spoiled by $GOOGL-1.1% announcing a partnership with $NVDA-0.2% for the next 10 years.
It will happen :DD. I have GOOGL stock in my portfolio, but I guess I don't mind this news too much.
https://www.cnbc.com/2023/09/11/sundar-pichai-says-google-and-nvidia-will-still-be-working-together-10-years-from-now.html
Thanks for the addition, so $GOOGL-1.1% is clear for 10 years. 😂😂
As long as $NVDA-0.2% is American, it's fine :)
This is more about the cloud tech giants ditching Nvidia altogether and going their own way with chips for their data centers.
It could happen, do you think you could make money this way by investing in $TSM+1.8% for example ?
I think these companies have looked up to Apple and are trying to emulate it... it's just going to take a lot of time and the outcome is highly uncertain...
But Apple uses ARM licenses to make a living and they have huge buying power with TSMC thanks to the iPhone. It's entirely possible they'll eventually build it up to cloud big tech, but I haven't read anywhere that any of them have come up with their own architecture that isn't covered by someone else's patents.
But I think the licenses are only a fraction of the price... then it's all about sales
But I think the licenses are only a fraction of the price... then it's all about sales
I'm sure it takes a lot of time, but as you say Apple has actually gotten rid of the dependence on foreign chipmakers. I think cloud big tech could go that way too. Sure, they'll still need someone to make the chips (Intel, TSMC...)
Now, I think that's the main difference if you can make it under your own roof or someone else's...
It probably won't be that simple, NVidia probably holds enough patents that it won't be easy to get around. Another question is if those companies are even an interesting customer for TSMC. According to the last call AI chips only make about 6% of their revenue, if every one of those big customers wanted to make a move they might not have such good delivery terms.
But it will be interesting, I personally think that maybe even $AMZN-0.4% would be able to push their own chips into production. There it's all about developing chips that they directly need.