Artificial intelligence startup OpenAI, backed by Microsoft (MSFT), is taking significant steps to diversify chip supply and reduce costs. According to Reuters, the company plans to develop its own custom AI chip in collaboration with Broadcom (AVGO) and TSMC (TSM). Following the news, AVGO and TSM stocks gained 4.2% and 1.2%, respectively.
The decision to develop the in-house AI chip is driven by the ongoing chip shortage and the high cost of Nvidia’s (NVDA) GPUs, which currently dominate the AI chip market. With this move, OpenAI aims to reduce reliance on external suppliers and potentially lower expenses.
It is worth highlighting that OpenAI’s growing demand for computing power is another major factor behind this move. The company’s AI models, particularly large language models like GPT-4, require massive computational resources for training and inference.
OpenAI to Bolster Hardware Capabilities
OpenAI is collaborating with Broadcom and TSMC in a strategic effort to enhance its hardware capabilities. By leveraging Broadcom’s expertise in developing application-specific integrated circuits (ASICs), OpenAI aims to customize chips to meet its specific requirements. Additionally, TSMC’s advanced manufacturing capabilities will help ensure the production of high-performance, energy-efficient chips.
Beyond chip development, OpenAI is actively investing in data center infrastructure to support the deployment of its AI models. The company is exploring partnerships and investments in data centers globally, including potential collaborations with Middle Eastern investors.
What Are Good Tech Stocks to Buy?
We used TipRanks’ Stock Comparison tool to see which technology companies rank favorably based on different parameters. As we can see, all four stocks, Microsoft, Nvidia, Broadcom, and Taiwan Semi, have Strong Buy consensus ratings, with analysts projecting some upside potential. Given their involvement in the AI market, it is fair to consider these companies as appealing investment opportunities.
