Nvidia stock was rising early Thursday. Meta-platforms' growing investment in artificial intelligence should be good news for the chipmaker, but there are signs of trepidation about profitability on AI.
Nvidia shares were up 0.8% at $802.97 in premarket trading. The stock closed down 3.3 percent on Wednesday. Earnings season for big tech companies kicked off Wednesday with Facebook parent Meta and the news was decidedly mixed.
Meta raised its capital spending forecast for 2024 to between $35 billion and $40 billion, from between $30 billion and $37 billion. On the face of it, this was good news for Nvidia, with a lot of money to spend on its hardware — Meta has said it plans to have 350,000 Nvidia H100 chips by the end of 2024 to power more powerful AI models. Can be trained.
However, Meta's warning that the investment could take years to reap significant returns could raise concerns about whether current AI spending is sustainable. Meta shares were falling 13 percent in premarket trading on Thursday.
Meta executives chose to highlight how they were cutting costs by using chips in-house rather than focusing on buying processors from Nvidia.
Advertisement – Scroll down to continue.
“Our meta-training and inference accelerator chip has enabled us to run some of our recommendation workloads at this low cost. [technology] And as the program matures over the coming years, we plan to expand it to more of our workloads,” Meta CEO Mark Zuckerberg told analysts on a call Wednesday.
If skepticism about the big tech's AI investment grows, Nvidia could do with other uses of the technology that show a profit. On Thursday, Nvidia-backed Synthesia showed off a new generation of AI-generated digital avatars that it says can mimic human emotions. UK-based Synthesia raised $90 million last year from investors including Nvidia at a valuation of about $1 billion.
Among other chipmakers, Advanced Micro Devices was flat and Intel rose 0.9 percent in premarket trading.
Nvidia shares are up 61% this year through Wednesday's close. This compares with a 6.3 percent increase.
S&P 500
The index gained 4.7 percent.
Nasdaq Composite Index
Advertisement – Scroll down to continue.
during the same period.
Write to Adam Clark at adam.clark@barrons.com.