SUPERNEWS

Equities

AI Chip Demand Sparks Market Rally with Nvidia's Surge - Meta and Microsoft Among Top Beneficiaries

Nvidia's 280% rally boosts stocks of 10 companies using its AI chips, with correlations up to 98% indicating a market-wide AI investment surge.

By Bill Bullington

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3/7, 22:05 EST
Amazon.com, Inc.
Cognizant Technology Solutions Corporation
Walt Disney Company
International Business Machines Corporation
Mattel, Inc.
Microsoft Corporation
NVIDIA Corporation
Ralph Lauren Corporation
SolarEdge Technologies, Inc.
Yum! Brands, Inc.
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Key Takeaway

  • Nvidia's 280% surge over the past year has propelled stocks of its AI chip customers, including Super Micro Computer and Tokyo Electron Device.
  • Meta Platforms and Microsoft are among the top beneficiaries, emphasizing strategic AI investments with high correlation to Nvidia's performance.
  • Sector impacts highlight Super Micro's 1000% stock increase and Mitsui's use of Nvidia GPUs for pharmaceutical AI applications.

AI Chip Demand Fuels Market Rally

Shares of Nvidia have experienced a remarkable surge, climbing 280% over the past year, driven by the booming demand for its artificial intelligence (AI) chips. This trend has not only benefited Nvidia but also extended to its customers, who are investing in these chips with the expectation that AI will enhance productivity and profitability. A CNBC Pro analysis identified companies whose stock performance is closely aligned with Nvidia's, indicating a broader market movement fueled by AI technology investments.

Key Beneficiaries of Nvidia's AI Chips

Among the standout companies benefiting from Nvidia's AI chips are Super Micro Computer, Tokyo Electron Device, Meta Platforms, Tata Motors, and Mitsui. These firms have seen their share prices move in tandem with Nvidia's, with correlations ranging from 93% to 98%. This high degree of correlation underscores the significant impact of AI chip technology on these companies' market valuations. Notably, Microsoft and TSMC hold the top relationship ranks with Nvidia, highlighting their substantial investments in AI chips for various applications.

Sector-Specific Impacts

  • Meta Platforms has disclosed substantial investments in Nvidia's chips as part of its long-term vision for artificial general intelligence (AGI), emphasizing the strategic importance of AI technology in its research and development efforts.
  • Super Micro Computer has seen over a 1000% increase in its stock price, benefiting from the integration of Nvidia's AI chips into its customized servers, which cater to AI-focused customers.
  • Tokyo Electron Device, a distributor of Nvidia’s chips in Japan, has rallied more than 180% over the past 12 months, capitalizing on Japan's ambition to become a hub for generative AI technology.
  • Mitsui is leveraging Nvidia's GPUs for Tokyo-1, a supercomputer aimed at advancing generative AI applications in the pharmaceutical industry, contributing to its nearly 60% stock price increase.

Street Views

  • Paul Meeks, Harvest Portfolio Management (Bullish on Super Micro):

    "Super Micro makes customized servers that are used by AI customers, so it uses Nvidia’s chips in their servers and ... [Super Micro] sells their servers to folks like Microsoft, and then they put them in a data center. And so Super Micro has done a pretty good job of transitioning its focus to AI customers."

Management Quotes

  • Mark Zuckerberg, CEO of Meta:

    "Meta revealed earlier this year that it is spending billions of dollars on Nvidia’s popular computer chips, which are at the heart of artificial intelligence research and projects."