Meta Platforms (META -1.93%) has built itself into a social media powerhouse thanks to its ownership of apps most of us use daily: from Facebook and Messenger to WhatsApp and Instagram. In fact, more than 3.2 billion people around the world use at least one of these apps every day.
This popularity has led to enormous revenue growth for Meta over the years, thanks to advertising. Advertising makes up the lion’s share of Meta’s revenue as companies seek to advertise their products and services to us where they know they’ll find us — on Meta’s apps.
But Meta isn’t only focused on social media. For quite some time, Chief Executive Officer Mark Zuckerberg has been vocal about his interest in a high-growth area that could boost Meta’s social media business and eventually offer it additional revenue streams. Meta is betting on artificial intelligence (AI), and just last week, the company increased its AI bet. My prediction is Meta’s latest move will be worth billions for one particular company… Nvidia (NVDA -1.78%). Let’s find out more.
Image source: Getty Images.
Meta’s AI program
First, some background on Meta’s AI program. Meta has built its own large language model (LLM), Llama, and has used this tool to create AI assistants and more. The company’s goal is for all of its users to have AI that suits their needs, from helping you plan your day to helping developers do their jobs.
Meta has said AI will be its biggest investment area this year, and it’s even offered details of how many graphics processing units (GPUs) it will need to meet its goals. GPUs are the chips powering the essential AI tasks of LLM training and inferencing.
Now here’s where Nvidia comes in. Earlier this year, Meta said the company will have 350,000 Nvidia H100s on board as part of a total of 600,000 worth of compute — so Nvidia’s GPUs make up more than half of the computing power.
And in the company’s second-quarter earnings report last week, Meta went even further. The company today is using Llama 3, but it’s starting to work on the newer version, Llama 4. The goal is to make Llama 4 the best in the industry next year, Zuckerberg said in the earnings call.
Meta’s need for AI chips
And here’s the news that could be worth billions for Nvidia.
“The amount of compute needed to train Llama 4 will likely be almost 10x more than what we used to train Llama 3 — and future models will continue to grow beyond that,” Zuckerberg said.
He didn’t mention Nvidia’s GPUs during this earnings call, but considering the company’s use of Nvidia chips so far — and the fact that Nvidia is about to launch the much-awaited Blackwell architecture and chip — it’s reasonable to be optimistic about orders over the long term. Especially since Zuckerberg says he prefers building capacity before it’s needed than falling behind.
The H100 costs about $25,000, and Nvidia has said the new Blackwell chip will cost at least $30,000, so Meta’s current and future orders should equal billions of dollars for Nvidia — even if Meta in the future doesn’t rely as heavily on the chip giant as it does today. It’s also important to remember that Nvidia plans on updating its GPUs annually, offering users a reason to come back to Nvidia for access to the latest top-performing chip.
What does this mean for you as an investor? Some investors have worried about Nvidia’s growth as rivals launch new chips that aim to compete with its GPUs. But the Nvidia GPU’s top performance, along with demand from industry heavyweights like Meta, make me optimistic this leader will stay ahead.
Meta’s big bet is good news for Meta, but it may be even better news for Nvidia — suggesting that demand will continue at a high level. And that’s why I predict Meta’s AI focus will equal billions of dollars for the chip giant.
So, investors shouldn’t worry about Nvidia losing out to the competition, and that makes the stock a compelling one to buy and hold right now.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.
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