Nvidia has lost some of its shine recently, and shares were falling again early Wednesday. But earnings from Oracle may prove to be a good sign for the chip maker.
The stock slipped 0.6% to $107.43 in Wednesday’s premarket as investors waited for the latest batch of U.S. inflation data. The overall market was also retreating — futures for the benchmark S&P 500 index were down 0.3%.
The Big Tech stock has racked up triple-digit gains in 2024 but is down 14% over the past three months on worries that an economic slowdown will stop AI demand from rising at such a breakneck speed, with underwhelming sales guidance issued at the end of last month adding fuel to the fire.
Big-name asset managers like Fidelity and T. Rowe Price have been trimming their stakes in Nvidia, while CEO Jensen Huang has also sold some shares.
Nevertheless, a strong set of earnings from software giant Oracle are a reminder that demand for its artificial intelligence-related chips should remain strong.
On a call with analysts, Oracle co-founder and Chief Technology Officer Larry Ellison predicted a $100 billion, nuclear power-fueled AI boom and played up the cloud-computing company’s efforts to build more datacenters, which are powered by massive clusters of Nvidia chips.
Oracle operates 162 datacenters right now but that number could eventually rise to 2,000, he said, with one site it’s currently designing expected to use up a gigawatt of power and run on nuclear reactors.
Nvidia’s dominates the market for AI chips, and Oracle isn’t the company’s only Big Tech customer with expansion plans. Elon Musk’s start-up xAI has loaded up on Nvidia GPUs to build up its Colossus AI training infrastructure, and Meta Platforms plans to have bought billions of dollars worth of H1 chips by the end of this year.
Among other chip makers, Advanced Micro Devices slid 0.5% ahead of the opening bell, while Broadcom dropped 1% and Qualcomm was down 0.4%.