Nvidia shares were falling on Wednesday after setting a record closing high the previous day. The chip maker was dropping alongside other technology companies, including its rival Advanced Micro Devices.
Nvidia
shares were 1.8% lower in premarket trading at $616.71 on Wednesday. Profit-taking looks like the mostly cause for the dip, after the stock closed up 0.5% at $627.74, on Tuesday a record close.
The market might also be taking a mixed message from the results of
AMD,
Nvidia’s rival in making the chips needed for artificial-intelligence systems, which gave an outlook that disappointed the market despite raised projections for sales of AI processors. AMD shares were down 4.8% in premarket trading. Fellow chip maker
Intel
was down 0.7%.
AMD raised its forecast for revenue this year from its MI300 chip for AI data-centers to $3.5 billion from $2 billion previously. It’s now expected to generate $11.2 billion in sales from its data-center business in 2024, according to a FactSet consensus. That compares with an expected $78.4 billion in revenue across all data-center products for Nvidia.
“We see an uphill battle for MI300 AI share gains vs. Nvidia’s leading A100/H100/B100 accelerators and CUDA software ecosystem,” wrote Oppenheimer analyst Rick Schafer in a research note on Wednesday.
However, AMD said weakness in videogaming chips, personal computers and other core markets weighed on its first-quarter forecast. Nvidia competes with AMD in many of the same areas.
Results from
Microsoft
and Google-parent
Alphabet
on Tuesday generally looked to bode well for Nvidia. Microsoft expects capital expenditures to “increase materially” in the current quarter, driven by investments incloud and AI infrastructure. Alphabet expects its 2024 capital expenditure to be notably larger than in 2023. Both companies are major Nvidia customers.
However, Alphabet did note that its AI offerings were also backed by its custom tensor processing units, or TPUs, which it has previously said can in some cases be superior to Nvidia hardware.
“We expect Google to be aggressive in purchasing compute, which likely points to solid spending with Nvidia and
Broadcom
for Google’s own TPUs,” wrote Melius Research analyst Ben Reitzes in a research note on Wednesday.
D.A. Davidson analyst Gil Luria said he also expects Microsoft to accelerate deployment of its in-house Maia 100 AI chips, decreasing its reliance on other chip providers such as Nvidia.
Nvidia shares were up 32% over the last month, while the
S&P 500
and
Nasdaq Composite
were up 4.6% and 6.3% respectively.
Nvidia’s trading volume of 41.1 million shares on Tuesday was close to its 65-day average of 42.6 million shares.
Write to Adam Clark at adam.clark@barrons.com
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