What's Going On With Nvidia Stock Thursday?

Nvidia Corp NVDA continues to prove its mettle as the ace AI beneficiary as Chinese internet giants, including Baidu, Inc BIDU, ByteDance Ltd, Tencent Holding Ltd TCEHY, and Alibaba Group Holding Limited  BABA, flock to the chipmaker for building generative artificial intelligence systems amid threats of potential U.S. embargo.

The companies have placed orders totaling $1 billion for close to 100,000 A800 processors from Nvidia for delivery in 2023. These companies also ordered $4 billion worth of graphics processing units (GPUs) for delivery in 2024, Nikkei Asia reports.

The A800 processors are a modified version of Nvidia's A100 GPUs, tailored for data centers as the U.S. slapped export restrictions to curb Chinese technological advancements. Chinese tech firms can only purchase A800 chips, which offer slower data transfer rates than A100s.

Nvidia's GPUs have become highly sought after globally for computing power in developing large language AI models.

Chinese companies hoard A800 chips out of concerns about potential new export restrictions. A broader GPU shortage also led to demand.

Major Chinese tech firms, including Baidu, ByteDance, and Alibaba, are working on their own large language AI models amid the ChatGPT frenzy.

The price of A800 chips in the hands of distributors has surged significantly due to high demand, with the cost increasing by over 50%.

Interestingly, this week, Nvidia launched a fresh AI chip, the GH200, that can pair its GPU with 141 gigabytes of cutting-edge memory and a 72-core ARM central processor. The launch coincided with reports indicating Nvidia's struggle to meet the demand for AI chips.

Reportedly, Nvidia dominates the market for AI chips with over 80% market share.

Nvidia CEO Jensen Huang said that the inference cost of large language models will drop significantly during the launch.

Price Action: NVDA shares are trading lower by 0.66% at $422.75 on Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.