Nvidia stock was gaining early Wednesday after the chip maker got a vote of confidence from Elon Musk’s SpaceX. It might not be hurting that its chief artificial-intelligence processor rival Advanced Micro Devices looks set for a bad day.
Nvidia shares were up 3.2% at $218.73 in morning trading. The move comes after SpaceX said it would exclusively use Nvidia AI chips.
“Going forward, we’ve decided to build exclusively on Nvidia because we think the Vera Rubin [AI chip] architecture is the best architecture,” Musk told analysts on an earnings call.
It’s a big win for Nvidia. While SpaceX is primarily known for its rocket-launch business, it also houses the xAI business and rents out access to its data-center infrastructure. Musk said SpaceX expects to have approximately two gigawatts of computing capacity by the end of this year, which could rise to as much as 10 gigawatts next year.
Over the longer term, SpaceX is planning Nvidia-powered orbital data centers, sidestepping the limitations of land and power which are posing increasing obstacles for terrestrial facilities, although some skeptics doubt it will ever be economically viable.
Meanwhile, Nvidia rival AMD was down more than 8% in the premarket after earnings that were ahead of Wall Street expectations but failed to wow the market after a strong run-up this year so far.
The reaction might act as a reminder of Nvidia’s relative cheapness ahead of its own earnings later this month—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 were trading at around $226.
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