What's Going On With Nvidia Stock Friday?

Nvidia Corp NVDA stock is trading higher Friday amid reports of the leading chip designer branching out to establish a new division dedicated to creating tailor-made chips for cloud computing entities and others, focusing on advanced artificial intelligence (AI) processors. 

Nvidia holds approximately 80% of the high-end AI chip market, Reuters reports.

This monopoly has significantly contributed to a 40% increase in its market value, reaching $1.73 trillion in the current year, following a more than threefold increase in 2023.

Also Read: Nvidia’s Future Has More Than Meets the Eye in AI Growth: Morgan Stanley

The company’s chips, particularly the H100 and A100 models, are highly sought after by leading tech firms such as OpenAI, Microsoft Corp MSFT, Alphabet Inc GOOG GOOGL, and Meta Platforms Inc META. 

Previous reports indicated Nvidia is battling a supply crisis aggravated by elevated RTX 4090 graphics card demand. Retailers reported up to 60% price hikes since the 2022 launch as buyers rush to bag RTX 4090 cards for resale in markets like China.

Despite Nvidia’s dominance, there’s a shift among tech giants towards developing their in-house chips for more specialized needs, aiming at energy efficiency and cost reduction.

Nvidia’s new strategy involves assisting these companies in designing custom AI chips, which positions it against competitors like Broadcom Inc AVGO and Marvell Technology, Inc MRVL. Both the stocks are trading lower Friday.

This expansion extends beyond data center chips, catering to the telecom, automotive, and video game sectors. 

The custom chip market, particularly for data centers, is on an upward trajectory, projected to reach $10 billion in the current year and doubling by 2025.

The custom chip market was valued at about $30 billion in 2023, indicating its substantial contribution to global chip sales.

This move will likely expand Nvidia’s influence beyond AI, with discussions underway for a wireless chip in collaboration with Ericsson ERIC. 

It plans to penetrate the automotive and video game markets. 

Nvidia gained 45% year-to-date, outperforming the broader indexes buoyed by the AI frenzy.

Price Actions: NVDA shares traded higher by 2.71% at $715.27 on the last check Friday.

Also Read: Nvidia vs. Huawei: The Battle for AI Supremacy Heats Up as Chip Constraints Redirect Focus

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

Image Via Shutterstock