Microsoft Becomes NVIDIA's Top AI Chip Buyer Amid Tech Shift

According to the latest estimates from tech consultancy firm Omdia, Microsoft has become the largest buyer of NVIDIA's AI chips this year, surpassing Meta by more than double the volume. Analysts predict that Microsoft will purchase 485,000 units of NVIDIA's Hopper chips in 2024, compared to Meta's 224,000. Additionally, Amazon and Google are expected to acquire 196,000 and 169,000 Hopper chips, respectively.

Chinese tech giants ByteDance and Tencent have also placed significant orders, each acquiring around 230,000 NVIDIA chips, including the slightly less powerful H20 model. The H20 chip, designed specifically for the Chinese market to circumvent U.S. export restrictions, will play a crucial role in their AI infrastructure. Despite the U.S. government imposing functional limitations on AI chip sales to China, ByteDance and Tencent have become NVIDIA's largest customers in China.

With the surge in AI development, global tech companies are projected to spend $229 billion on server infrastructure this year, with Microsoft and Amazon accounting for $31 billion and $26 billion of this expenditure, respectively. Approximately 43% of these investments are directed towards NVIDIA, as the company's cutting-edge GPUs continue to be in high demand. Microsoft's chip purchases give it a competitive advantage in building next-generation AI systems.

However, in an effort to reduce dependency on NVIDIA, many tech companies are accelerating their development of proprietary AI chips. Both Google and Meta are expected to deploy approximately 1.5 million of their own AI chips this year, while Amazon plans to deploy around 1.3 million. Amazon recently announced plans to use hundreds of thousands of its latest Trainium chips to build a new cluster for Anthropic, an OpenAI competitor, investing $8 billion in the project to train its next-generation AI models. In contrast, Microsoft lags behind its competitors in deploying its own AI chips, with just 200,000 Maia chips planned for use this year.

While NVIDIA continues to dominate the AI chip market, its competitor AMD is making significant strides. Meta has purchased 173,000 AMD MI300 chips, while Microsoft has acquired 96,000.

As major tech companies race to build larger GPU clusters, NVIDIA's market value has surged past $3 trillion this year. The company is also preparing to release the successor to Hopper, the Blackwell chip.