Nvidia’s biggest customers are also the AI chip maker’s biggest threat

Microsoft $MSFT and Meta $META are the biggest spenders on the company’s H100, the coveted $30,000 chip that powers generative AI products. In 2023, both companies spent $9 billion on these hot chips, according to a report by financial services firm DA Davidson. But these buyers are also building their own AI chips, raising questions about Nvidia’s long-term revenue growth.

Though, tech companies have been quick to announce new AI assistants and whatnot, Nvidia is one of the few actually making money from generative AI. In the three months ending last Oct. 29, its revenue more than tripled from the same period in 2022.

Tech giants have their own AI chips

But other technology players are catching up to Nvidia.

At least four tech giants—Microsoft, Google $GOOGL, Amazon $AMZN, and Meta—revealed their own AI chips last year, with some still in development. This enables them to reduce their reliance on Nvidia and slash the cost of developing AI models.

Nvidia also faces growing competition from chipmakers like AMD $AMD and Intel $INTC.

Will Nvidia’s boom last?

For Nvidia to sustain its current revenue trajectory, its largest customers—aka the Meta and Microsofts of the world—would have to boost their capital spending with the chip maker, according to the report. If not, other clients would need to spend enough on data center hardware and other equipment to make up for any shortfall by big tech firms.