<p><strong>Meta Platforms</strong> <span class="ticker-mention inline-flex items-center font-bold">(META <span class="ml-1 text-green-900">+0.21%</span>)</span> has been one of the most noteworthy names in the artificial intelligence (AI) space over the past couple of years. The company, known for its social media apps, has spoken of its intentions to pursue AI and even bring superintelligence to people around the world. As part of this, Meta has been spending billions of dollars to build out data centers, create large language models, and offer AI features to app users and its advertising customers.</p>
<p>What's the relationship between Meta and AI chip leader <strong>Nvidia</strong> <span class="ticker-mention inline-flex items-center font-bold">(NVDA <span class="ml-1 text-red-900">0.04%</span>)</span>? Meta is one of Nvidia's biggest customers, buying the tech giant's graphics processing units (GPUs) to power key tasks such as the training of its AI models. Though Meta is a significant Nvidia customer, the company has also turned to rival chip designer <strong>Advanced Micro Devices</strong> in the past, and Meta even makes its own chips.</p>
<p>Meta isn't alone. Some of Nvidia's other customers -- <strong>Amazon</strong>, for example -- operate in the same way: They seek chips from a variety of sources. And this has prompted investors to worry that Nvidia eventually may lose market share. But, in recent days, Meta made a striking move, and it's excellent news for Nvidia. Let's check it out.</p>
<div><img alt="An investor looks at something on a smartphone at home." width="880" height="587" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NTcwMDQvaW52ZXN0b3Itc21pbGluZy1waG9uZS1hdC1ob21lLmpwZyZ3PTM4NDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NTcwMDQvaW52ZXN0b3Itc21pbGluZy1waG9uZS1hdC1ob21lLmpwZyZ3PTM4NDA"/>
<p>Image source: Getty Images.</p>
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<h2>An early focus on GPUs</h2>
<p>First, though, let's start off with a quick summary of Nvidia's business so far. Even before AI became a high-growth industry, Nvidia recognized the potential of the technology and decided to design its GPUs to suit it. This early market presence helped Nvidia build an AI empire that now includes a variety of products from software to networking tools. Importantly, this focus on AI from the earliest days has brought Nvidia expertise and kept the company a step ahead of rivals: Nvidia's GPUs continue to maintain their reputation as the most powerful on the market.</p><div><div id="foolcom_sidebar_top_container"></div></div>
<p>On top of this, Nvidia has committed to updating these chips annually, a move that makes it very difficult for competitors to slip ahead.</p><div></div>
<p>Still, investors have worried about the increasing strength of products from rivals such as AMD -- and even moves by Meta, Amazon Web Services (AWS), and others to create their own chips. These new chips are cheaper than Nvidia's GPUs, offering them a clear selling point.</p><div><div id="in_line_article_pitch_container"></div></div>
<p>Now, let's turn to the move Meta just made that should relieve investors' concerns. Meta has signed a new deal with Nvidia for the purchase of millions of chips, including GPUs, stand-alone central processing units (CPUs), and networking and security technologies. The value of the deal wasn't released, but CNBC cited Creative Strategies analyst Ben Bajarin as saying it may be worth &#34;tens of billions of dollars.&#34; </p>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Nvidia Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL05WREEucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL05WREEucG5nJnc9MTI4"/></div><div><h2>NASDAQ: NVDA</h2><div>Nvidia</div></div></div><div><div><div>Today's Change</div><div>(-0.04%) $-0.08</div><div>Current Price</div><div>$187.90</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div>$4.6T</div><div>Day's Range</div><div>$185.66 - $188.43</div><div>52wk Range</div><div>$86.62 - $212.19</div><div>Volume</div><div>127M</div><div>Avg Vol</div><div>179M</div><div>Gross Margin</div><div>70.05%</div><div>Dividend Yield</div><div>0.02%</div></div></div></div></section>
<h2>Nvidia's CPUs for data centers</h2>
<p>A key point here is that Meta is turning to Nvidia for CPUs, the main processor in a computer, and will use these chips on their own in data centers -- this represents the first big move by Nvidia, a GPU specialist, in the CPU for data centers market.  </p>
<p>And the really good news here is that this deal shows the strength of Nvidia's leadership. Though Meta has developed its own chips and could also turn to other players for chips, the company instead has chosen Nvidia as the backbone of its AI infrastructure. Meta has put an enormous focus on AI, so it's clear this company is looking for the very best products to shepherd it along the path -- and once again, it's chosen Nvidia.</p>
<p>So, what does this mean for investors? This doesn't suggest that other AI chip companies won't be successful. There is plenty of room for more than one company to generate significant revenue in this space. But this deal makes it clear that Meta's development of its own chips and even potential moves to buy chips from other companies aren't meant to replace Nvidia. And it's very likely that other Nvidia customers are taking the same route, diversifying supply while still relying on the AI giant.</p>
<p>All of this should relieve worries about Nvidia losing market share -- and spur optimism about Nvidia's next chip launch later this year.</p><div id="article_pitch_container"></div><div id="promobox_container"></div>

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<p>Meta Platforms has signed a significant deal with Nvidia to purchase millions of chips, including GPUs and CPUs, valued at potentially tens of billions of dollars. This move highlights Meta's reliance on Nvidia for its AI infrastructure, despite its own chip development. The agreement alleviates investor concerns about Nvidia losing market share to competitors and reinforces Nvidia's position as a leader in the AI chip market. The deal also marks Nvidia's entry into the CPU market for data centers, showcasing its commitment to innovation and maintaining its competitive edge.</p>

- Meta Platforms has made a significant multi-billion dollar deal with Nvidia for GPUs and CPUs to enhance its AI capabilities.  
- This partnership indicates Meta's preference for Nvidia's technology over competitors, despite its own chip development and sourcing from others, reflecting Nvidia's strong leadership in the AI chip market.  
- The agreement alleviates investor concerns about Nvidia potentially losing market share while highlighting the ongoing demand for its advanced products in a rapidly growing industry.

Meta Just Made a Striking Move. And It's Excellent News for Nvidia.