Multiple large Chinese internet giants are ordering billion of dollars worth of NVIDIA (NASDAQ:NVDA) AI chips ahead of a possible U.S. clampdown, FT.com reported.
Baidu (NASDAQ:BIDU), ByteDance, Tencent (OTC:TCEHY), and Alibaba (NYSE:BABA) have placed orders totaling $1 billion to procure approximately 100,000 A800 processors from a U.S.-based chip manufacturer, with deliveries scheduled for this year, the report said citing people with knowledge of the situation. Additionally, the Chinese conglomerates have committed to acquiring an additional $4 billion worth of graphics processing units for delivery in 2024, the report added.
The A800 is a less powerful iteration of NVIDIA's advanced A100 GPU designed for data centers. Chinese tech firms can only purchase A800s due to export restrictions imposed by Washington last year, aimed at curbing Beijing's tech ambitions. A800s feature slower data transfer rates compared to A100s.
As the leading provider of AI chips, shares of NVIDIA have soared 191% year-to-date on surging demand for its chips and the hype surrounding AI in general. The stock, however, is nearly 12% off its 52-week high of $480.88.
Earlier today, analysts at Citi told clients to buy the recent weakness in the stock, which they believe is due to supply concerns. Yesterday, Super Micro Computer (NASDAQ:SMCI) said it sees component supply constraints from NVIDIA and others in the supply chain. The analysts said although HBM and advanced packaging limit supply, NVIDIA paid to secure HBM capacity, focusing on key clients. Further, data center sales rely on mix/pricing, not just units.