Nvidia (NVDA) stock is back in the green today after a week of struggling amid rising market headwinds.
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As NVDA has trended chiefly downward throughout December, experts have highlighted the threat of rising competition from other chipmakers and the possibility that AI spending may be slowing down as likely culprits pushing Nvidia into a correction period.
While shares are rising again today, as of this writing, they are currently down almost 3% for the month, hinting at a lackluster end to a year of significant growth.
Whether or not AI spending will slow down enough to impact Nvidia remains to be seen. However, one tech consultancy firm just released a report on the companies it estimates are buying the most chips from Nvidia. The list includes some prominent tech sector names, but it also features some companies that might not seem like likely top AI-chip buyers.
Nvidia may have sent some of its biggest chip orders in 2024 to some unexpected companies. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
Nvidia customers include these companies, analysts think
The analyst team behind the Nvidia chip buyer list is part of Omdia, a global technology consultancy firm. According to a recent report from The Financial Times, “Omdia analyses companies’ publicly disclosed capital spending, server shipments, and supply chain intelligence to calculate its estimates.”
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In this case, analysts analyzed which companies appear to be buying the most Nvidia Hopper graphics processing units (GPUs), a popular chip commonly used in data center infrastructure. It is important to note that the numbers listed in the list of top AI-chip buyers cited by the outlet are estimates, not actual order statistics provided by Nvidia.
According to Omdia’s analysts, Microsoft (MSFT) ordered more Nvidia Hopper chips than any other tech company in 2024, with an estimated total of 485,000. That’s more than double the order of the second U.S. company on the list, Meta Platforms (META) , which is estimated to have ordered 224,000 chips.
However, between these Silicon Valley leaders are two prominent international tech companies based in China.
Related: Major Apple chip supplier is expanding into the U.S.
TikTok parent ByteDance, a privately held corporation, ranks behind Microsoft with estimated chip orders of 230,000, while tech conglomerate Tencent Holdings TCEHY is directly behind with a slightly smaller order close to the 230,000 range.
The Financial Times adds that both ByteDance and Tencent’s Nvidia chip orders in 2024 included the H20 model, described as “a less powerful version of Hopper that was modified to meet US export controls for Chinese customers.”
Following Meta’s order, the final three estimated top buyers on the list are Elon Musk’s two companies Tesla (TSLA) and xAI, which are listed as one company, followed by Amazon and Google.
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A quick look at the ranking reveals that three of Silicon Valley’s most prominent companies likely made significantly smaller Nvidia chip orders than one of their primary competitors, according to Omdia’s estimates.
Nvidia may be facing a shifting AI-chip market
Given the industry-wide reliance on Nvidia’s chips, which has propelled the company to the top of its field, these estimates raise a key question: Are Amazon (AMZN) and Google (GOOGL) starting to transition away from needing Nvidia GPUs to power their AI platforms?
Other tech companies have indeed been working hard to compete with Nvidia’s AI hardware. As TheStreet’s Silin Chen recently reported, “Most AI training uses costly Nvidia GPUs. Amazon aims to enhance its custom chips to cut customer costs and boost supply chain control. This could possibly reduce its reliance on Nvidia, a key cloud partner.”
In April 2024, both Google and Meta announced progress on their in-house AI chips, touting them as Nvidia chip alternatives.
Related: Broadcom CEO sounds alarm on crucial shift in AI-chip market
This led to what Fortune described as a “trillion-dollar question” for Nvidia, specifically how much of a threat do these new chips pose. Now, experts estimate that these same companies are making much smaller orders than some competitors.
The relatively high Nvidia chip orders from ByteDance and Tencent indicate that Nvidia is still a popular choice in China’s tech market. However, since TikTok may be banned in the U.S. in the coming months, the popular platform is facing an uncertain future.
If Nvidia is losing ground in the U.S. chip market, as the small order estimates from Amazon and Google suggest, it will need to make up for them elsewhere, especially as companies like Broadcom continue advancing in the AI chip market.
On top of that, relying on orders from ByteDance may be risky, as TikTok may be forced to scale back operations significantly if the U.S. ban is enacted.
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