Google and Meta Pursue AI Chip Deals Amid Nvidia Stock Dip
MOUNTAIN VIEW, CA & MENLO PARK, CA - November 26, 2024 – Google and Meta are reportedly in active negotiations to secure substantial supplies of AI chips from multiple vendors, including Nvidia, as both tech giants accelerate their artificial intelligence initiatives. The moves come as Nvidia’s stock experienced a significant downturn on November 22, 2024, losing approximately $200 billion in market capitalization following disappointing revenue forecasts and increased competition.
These discussions highlight the escalating demand for specialized hardware crucial for training and deploying large language models and other AI applications.Both Google and Meta are heavily invested in AI advancement, viewing it as central to their future growth and competitive positioning. Securing a stable and diverse supply chain of AI chips is paramount to mitigating risks associated with reliance on a single provider and ensuring continued innovation. The potential deals underscore a strategic shift toward greater supply chain resilience in the face of geopolitical uncertainties and rapidly evolving technological landscapes.
Sources indicate Google is exploring partnerships beyond Nvidia, seeking to diversify its chip sourcing to include AMD and potentially custom-designed solutions. Meta is similarly engaged in talks with multiple suppliers to secure the necessary processing power for its enterprising metaverse projects and AI-driven advertising platforms.The companies’ efforts to secure chip supplies are driven by projections of exponential growth in AI workloads, requiring increasingly powerful and efficient hardware.
Nvidia’s recent stock decline was triggered by weaker-than-expected data center revenue guidance for the current quarter, alongside concerns about slowing demand in China due to export restrictions.While Nvidia remains the dominant player in the AI chip market, the emergence of viable alternatives and the proactive sourcing strategies of major customers like google and Meta signal a potential shift in the competitive dynamics of the industry. Analysts predict increased pressure on Nvidia to maintain its market share and innovate to address evolving customer needs.
