NVIDIA stock rises, what does Meta's earnings mean for AI chip makers?

NVIDIA shares rose 1.4% in early trading to 807.50 dollars. Shares closed down 3.3% on Wednesday. The financial results season for major technology companies began on Wednesday along with Facebook's parent company Meta, but the news was clearly mixed.

Meta raised its capital investment forecast for 2024 from 30 billion to 37 billion dollars to 35 billion to 40 billion dollars. On the surface, this was good news for Nvidia, and much of that money was spent on hardware. Meta said it plans to install 350,000 Nvidia H100 chips by the end of 2024 to train more powerful AI models.

However, Meta's warning that investments could take years to generate significant returns could raise concerns about whether current AI spending is sustainable. And Meta shares were down 13% on Thursday.

Instead of focusing on buying Nvidia processors, Meta executives chose to emphasize how they are reducing costs by using in-house chips.

“Our meta-training and inference accelerator chips have enabled us to run some of our recommendation related workloads on this cheap “technology” stack. As this program matures over the next few years, we plan to expand this to more workloads,” Meta CEO Mark Zuckerberg told analysts during a conference call on Wednesday.

If doubts about big tech's AI investments intensify, NVIDIA will be able to profit from other uses of technology. On Thursday, Nvidia-supported Synthesis unveiled a new generation of AI-generated digital avatars that can mimic human emotions. Synthesia, which is based in the UK, raised 90 million dollars from investors such as NVIDIA last year with a valuation value of about 1 billion dollars.

NVIDIA's stock price rose 61% from the beginning of this year until Wednesday's closing price. Comparing this, it can be compared to the 6.3% rise in the S&P 500 index and the 4.7% increase in the Nasdaq Composite Index during the same period.