SpaceX told investors it will build its artificial-intelligence infrastructure exclusively on Nvidia chips, and Nvidia shares rose in premarket trading Wednesday as a result. Rival AMD tumbled despite beating earnings estimates, a contrast that might serve as a reminder of Nvidia's cheaper valuation ahead of its own report later this month.
Nvidia shares rose 2% to $216.16 in premarket trading Wednesday after SpaceX said it would build its artificial-intelligence infrastructure exclusively on Nvidia chips. Speaking on an earnings call, Musk said "we've decided to build exclusively on Nvidia", calling the Vera Rubin chip architecture the best available.
SpaceX is primarily known for its rocket-launch business, but it also houses the xAI unit and rents out access to its data-center infrastructure. The company is also planning Nvidia-powered orbital data centers meant to sidestep the land and power constraints facing terrestrial facilities, though some skeptics doubt the approach will ever be economically viable.
SpaceX's capacity plans set to scale sharply
Musk told analysts that SpaceX expects to have about two gigawatts of computing capacity by the end of this year, rising to as much as 10 gigawatts next year.
AMD's earnings beat fails to impress the market
AMD, Nvidia's chief AI-processor rival, was down more than 8% in premarket trading after posting second-quarter results that topped Wall Street's estimates but failed to excite investors following a strong run-up this year. The move might serve as a reminder of Nvidia's relatively cheap valuation ahead of its own earnings. AMD trades at a forward price-to-earnings ratio of around 44 times, compared with 19.4 times for Nvidia, according to FactSet.
Nvidia was a recent Barron's stock pick when shares traded around $226.
Source: Barron's
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