On Monday, Nvidia’s (NVDA) 2.24% rose while Microsoft (MSFT) continued its slump. As a result, Nvidia earned the title of second-biggest company in the world. The trading dichotomy between the two firms is irrational.
Microsoft, which powers its CoPilot AI using ChatGPT, needs Nvidia’s GPU-powered servers. Similarly, Nvidia needs Microsoft to continue its investments in AI hardware. Markets are potentially signaling a growing concern that ChatGPT subscriptions are not growing fast enough. As they lose money but spend more to build the AI, the business model is less sustainable.
Nvidia benefits either way. Software firms are competing with Microsoft to win the most customer subscriptions for AI services. In July, MSFT stock peaked at $468.35. The stock bottomed at around $400 in August and September but pulled back from $440 after September 19, 2024. Shares closed at $409.54.
Markets expect the Department of Justice to submit its document outlining recommended actions against Alphabet’s (GOOG) Google. The government may demand that Google break itself or open up its search engine data and algorithm. Markets are not taking the DOJ seriously. Google may need to divest its Android holding. This would fracture the consistency of the system among device makers. Watch Qualcomm (QCOM) and Apple (AAPL) stock after the DOJ’s announcement.