Nvidia (NVDA) shares slipped approximately 1.6% on Monday, pressured by Microsoft's announcement that it will aggressively scale its custom AI chip family, a move that could lessen the software giant's reliance on Nvidia's processors. Microsoft's stock, in contrast, gained nearly 1.25%.
The broader market showed mixed performance, with the Dow Jones Industrial Average up 0.44%, the S&P 500 roughly flat, and the Nasdaq Composite down about 0.30% as of 11:30 ET.
Microsoft's 'Biggest Bet' on Custom Silicon
Microsoft revealed plans to ramp up production of its next-generation AI chip, Maia 300, with deployment scheduled to begin next calendar year. CEO Satya Nadella described the initiative as the company's "biggest bet yet on our own silicon," aiming to make Maia the primary inference system for Microsoft's products and services.
The company highlighted the efficiency of Maia 300, claiming it delivers 40% more tokens per megawatt than leading GPU-based systems. This metric indicates how much AI processing can be performed per unit of power, a critical factor in data center economics.
This move aligns with a broader industry trend, as tech giants like Amazon, Google, and Meta are also developing custom AI chips to reduce their dependence on Nvidia. For investors, the key question is the extent to which these in-house chips will replace purchases from Nvidia, potentially impacting its revenue growth.
Memory Chip Sell-Off
Nvidia was not alone in the downturn. Memory chipmakers experienced a broader sector decline, with SanDisk falling nearly 6.5%, Micron down about 4%, and Intel dropping over 3%. AMD, Nvidia's main competitor, also traded 3.4% lower. South Korean memory giants SK Hynix and Samsung Electronics also saw declines.
The catalyst was Chinese memory maker ChangXin Memory Technologies (CXMT), which reported significant progress in a new memory cell design aimed at increasing storage density. CXMT plans to introduce a server memory product based on this design by the end of this year, potentially intensifying competition in the memory market.
TSMC Earnings in Focus
Investors are also looking ahead to Taiwan Semiconductor Manufacturing Co.'s (TSMC) quarterly results, scheduled for Thursday. TSMC is expected to post its sixth consecutive quarter of record profit. As the manufacturer of Nvidia's leading processors and a key part of the advanced-packaging supply chain, TSMC's performance is a critical indicator of AI chip demand.
A strong earnings report from TSMC would reinforce the view that demand for Nvidia's processors remains robust, even as major customers invest in custom alternatives. For Nvidia investors, the coming days will bring two important developments: Microsoft's expansion of its own AI chip program and TSMC's latest results, which could offer further insight into the strength of demand across the AI semiconductor supply chain.
This article is for informational purposes only and does not constitute financial advice.
