Nvidia Stock Drops. Meta Is Pushing Ahead with Its Own AI Chips.

Nvidia chips are the favored choice for training artificial-intelligence systems. (Courtesy NVIDIA)

Key Points

• Nvidia’s shares decreased by 1.3% to $184.15 in early trading after reaching a $4.5 trillion market value the previous day.
• Meta Platforms plans to acquire chip startup Rivos to accelerate development of its custom AI chips, MTIA, as an alternative to Nvidia’s hardware.
• Rivos was reportedly developing software to enable Nvidia’s CUDA code to run efficiently on its own chips, enhancing Meta’s AI processor capabilities.

Nvidia was slipping early on Wednesday after becoming the first company to reach a $4.5 trillion market value the previous day. One of its major customers is accelerating its efforts to have alternatives to Nvidia’s chips.

Nvidia shares were down 1.3% at $184.15 in early trading. The stock rose 2.6% on Tuesday, reaching a record close.

Nvidia has been moving upward on the back of a string of deals showing continuing appetite for spending on AI infrastructure. The latest is social-media company Meta Platforms’ deal for up to $14.2 billion worth of computing capacity with AI infrastructure company CoreWeave, which rents out Nvidia hardware.

However, Meta is simultaneously working on developing custom AI chips to take on an increasing amount of the processing currently done on Nvidia hardware. It now plans to acquire chip startup Rivos to accelerate that development, according to a post from Meta’s vice president of engineering Yee Jiun Song on LinkedIn on Tuesday.

Meta didn’t immediately respond to a request for comment on the value of the acquisition. Rivos was close to securing new funding at around a $2 billion valuation, Reuters reported.

Meta’s own AI processors are called MTIA, an acronym for Meta Training and Inference Accelerator. The first MTIA chip made its debut in 2023, and was developed jointly with Broadcom . Meta executives said earlier this year that MTIA chips could replace graphics-processing units—the specialty of Nvidia—in some servers.

Part of the reason Nvidia has retained a dominant market share in AI processors is that developers are familiar with its CUDA software. Rivos was previously reported by technology-focused news outlet The Information to be developing software to enable Nvidia’s CUDA code to run efficiently on its own chips.

“Given the success of our first two AI accelerators, we are eager to accelerate and expand our MTIA road map. Rivos has deep technical expertise and experience designing and developing the full stack of AI systems,” Meta’s Song wrote.

Among other chip makers, Advanced Micro Devices was up 0.3% and Broadcom was dropping 0.7% in morning trading.

Write to Adam Clark at adam.clark@barrons.com