Cramer Says Microsoft 'Simply Can't Compete' With Nvidia After Software Giant Launches In-House AI Chips

Microsoft Corp. MSFT kickstarted its “Ignite 2023,” an annual conference for developers and IT professionals, on Wednesday and much of the announcements left investors more bullish on the stock.

CNBC Mad Money host Jim Cramer, however, was skeptical about the software giant’s move to make in-house chips.

What Happened: “I love Microsoft but it is pretty amazing that Microsoft has had to team up with Oracle Corp. ORCL to get Nvidia Corp. NVDA chip access and that’s a longer term relationship,” said Cramer in a post on X, formerly Twitter. “Like everyone else, Microsoft simply can’t compete with Nvidia,” he said, adding “Can’t compete, must join.”

In a separate post, Cramer said, “If Microsoft is readying some skunkworks “nvidia-like” chip why is it partnering with Oracle because it needs so many Nvidia chips?”

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Why It’s Important: Microsoft formally launched the first in-house designed CPU called Azure Cobalt and AI accelerator chip Maia at Ignite 2023. The company also hinted at reselling the Azure Cobalt CPU to other cloud providers, starting in 2024.

Microsoft, which is among the frontrunners in the AI race, has an ongoing partnership with OpenAI, which uses Nvidia chips for training its large-language models. The software giant also uses AI chips for its AI services. The move to make AI chips in-house is driven by the quest to bring down the spiraling costs associated with sourcing them.

The Microsoft-Oracle partnership Cramer referred to was announced last week and the multi-year agreement between the companies provides for Microsoft using Oracle Cloud AI Infrastructure along with Microsoft Azure AI infrastructure, for inferencing of AI models that are being optimized to power Microsoft Bing conversational searches daily.

Oracle in turn is a customer of Nvidia’s high-performance AI accelerator chips.

Cramer is a self-proclaimed Nvidia bull, and to show his love toward the company, he even named one of his dogs as Everest Nvidia in June 2017.

Microsoft closed Wednesday’s session up merely 0.04% at $369.67, while Nvidia paused after a 10-session winning streak and ended down 1.55% at $488.88, according to Benzinga Pro data.

Photo by s_bukley on Shutterstock

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