A slew of Big Tech companies are reporting earnings this week, and already at least one clear winner has emerged: Nvidia.
The chipmaker continues to reap the benefits of Big Tech's large spending on artificial intelligence. Nvidia makes a good chunk of the technology used to power AI.
Tech giants are expected to be grilled on their AI spending in this week's earnings calls, and some already have been. In Microsoft's earnings call on Tuesday, for example, the first question in the Q&A portion was on investments in generative AI — and whether they were paying off.
Microsoft's capital expenditures in the fourth quarter, for instance, were $19 billion — of which about half went to central processing units, or CPUs, and graphics processing units, or GPUs. Microsoft has bought these CPUs and GPUs primarily from Nvidia.
Nvidia shares were up more than 12% by midday Wednesday. Morgan Stanley analysts on Wednesday also named Nvidia a top stock pick.
Meanwhile, Google's parent company, Alphabet, earlier this month faced similar AI-related questions, with investors repeatedly pressing executives for specifics on returns on AI spending.
Meta, Amazon, and Apple will likely get similar questions about their own AI bets in their earnings calls this week as Big Tech firms continue paying steeply for AI with little to show for it so far when it comes to revenue.
Nvidia's stock had been drifting lower since the beginning of July, but it's bounced back after Microsoft's earnings — and its mention of big spend on processing units. CEO Jensen Huang's company was also a winner in last quarter's earnings season.
Mentions of "AI infrastructure" and "generative AI" were aplenty in last cycle's Big Tech earnings calls, and more than a few tech giants explicitly name-dropped Nvidia.
Meta in January said it would buy 350,000 H100 GPUs from Nvidia this year. Microsoft, meanwhile, is targeting 1.8 million GPUs by the end of 2024, according to an internal document.
