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Microsoft (MSFT), OpenAI Reportedly Plan Data Center Project
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Microsoft (MSFT - Free Report) and OpenAI are reportedly collaborating on an ambitious venture, as reported by The Information, to establish a cutting-edge data center project estimated at a staggering $100 billion. Central to this initiative is the development of an artificial intelligence (AI) supercomputer named Stargate, which is anticipated to debut in 2028.
The proposed endeavor underscores the surging demand for AI data centers capable of managing complex tasks beyond the scope of conventional data centers. With the rapid adoption of generative AI technology, there is an imperative need for advanced infrastructure.
The envisioned supercomputer, to be situated in the United States, represents the pinnacle of a series of supercomputers slated for construction over the next six years. Stargate, positioned as the fifth phase of development, is preceded by a smaller fourth-phase supercomputer set to be launched around 2026.
The financial implications of this project are substantial, with expected expenses exceeding $115 billion, tripling Microsoft's capital spending from the previous year. The high cost of building the supercomputer is being attributed to bottlenecks in the supply of high-performance GPUs used for the development of AI models. These chips, often commanding high prices, are crucial for the enhanced computational capabilities required for advanced AI tasks.
Tech Giants & Chipmakers Battle for an Edge in the AI Race
Microsoft's collaboration with chip companies like Nvidia (NVDA - Free Report) , coupled with the development of custom-designed computing chips, signifies a multi-faceted approach to ensure the success of the project. Moreover, the project is designed to accommodate chips from various suppliers, ensuring flexibility and efficiency in its operations.
Currently, Nvidia is one of the largest suppliers of high-end chips and is struggling to keep up with ever-increasing demand. The company’s latest AI chip called Blackwell B200 will cost anywhere between $30,000 and $40,000 per unit. Notably, the platform features GB200 NVL72, with 72 Blackwell GPUs and 36 Grace CPUs interconnected by fifth-generation NVIDIA NVLink. This will aid in speeding up inference workloads for resource-intensive and multi-trillion-parameter language models.
Advanced Micro Devices (AMD - Free Report) has entered into the conversation of new accelerators and processors for AI with its MI300 series chips. AMD’s MI300X chips helped the company take market share by battling Nvidia’s popular H100 series chips that have been used to train large language models like OpenAI’s chat GPT. Intel Corporation (INTC - Free Report) unveiled the Intel Core Ultra featuring the neural processing unit, which enables power-efficient AI acceleration with 2.5x better power efficiency than the previous generation.
Last month, Microsoft introduced two new devices, namely the Surface Pro 10 and Surface Laptop 6. These AI-powered PCs cater specifically to business needs, featuring Copilot integration and advanced hardware specifications, such as Intel Core Ultra processors and Neural Processing Units for AI experiences.
Microsoft has also agreed to pay $650 million in order to license Inflection AI’s artificial intelligence software, alongside the company’s recent move to hire the startup’s co-founders, Mustafa Suleyman and Karén Simonyan. MSFT will also hire Inflection AI’s 70 employees. As part of the deal, the company will pay $620 million to license Inflection’s AI models and around $30 million for waiving any legal rights related to the mass hiring.
Image: Bigstock
Microsoft (MSFT), OpenAI Reportedly Plan Data Center Project
Microsoft (MSFT - Free Report) and OpenAI are reportedly collaborating on an ambitious venture, as reported by The Information, to establish a cutting-edge data center project estimated at a staggering $100 billion. Central to this initiative is the development of an artificial intelligence (AI) supercomputer named Stargate, which is anticipated to debut in 2028.
The proposed endeavor underscores the surging demand for AI data centers capable of managing complex tasks beyond the scope of conventional data centers. With the rapid adoption of generative AI technology, there is an imperative need for advanced infrastructure.
The envisioned supercomputer, to be situated in the United States, represents the pinnacle of a series of supercomputers slated for construction over the next six years. Stargate, positioned as the fifth phase of development, is preceded by a smaller fourth-phase supercomputer set to be launched around 2026.
The financial implications of this project are substantial, with expected expenses exceeding $115 billion, tripling Microsoft's capital spending from the previous year. The high cost of building the supercomputer is being attributed to bottlenecks in the supply of high-performance GPUs used for the development of AI models. These chips, often commanding high prices, are crucial for the enhanced computational capabilities required for advanced AI tasks.
Microsoft Corporation Price and Consensus
Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote
Tech Giants & Chipmakers Battle for an Edge in the AI Race
Microsoft's collaboration with chip companies like Nvidia (NVDA - Free Report) , coupled with the development of custom-designed computing chips, signifies a multi-faceted approach to ensure the success of the project. Moreover, the project is designed to accommodate chips from various suppliers, ensuring flexibility and efficiency in its operations.
Currently, Nvidia is one of the largest suppliers of high-end chips and is struggling to keep up with ever-increasing demand. The company’s latest AI chip called Blackwell B200 will cost anywhere between $30,000 and $40,000 per unit. Notably, the platform features GB200 NVL72, with 72 Blackwell GPUs and 36 Grace CPUs interconnected by fifth-generation NVIDIA NVLink. This will aid in speeding up inference workloads for resource-intensive and multi-trillion-parameter language models.
Advanced Micro Devices (AMD - Free Report) has entered into the conversation of new accelerators and processors for AI with its MI300 series chips. AMD’s MI300X chips helped the company take market share by battling Nvidia’s popular H100 series chips that have been used to train large language models like OpenAI’s chat GPT. Intel Corporation (INTC - Free Report) unveiled the Intel Core Ultra featuring the neural processing unit, which enables power-efficient AI acceleration with 2.5x better power efficiency than the previous generation.
Last month, Microsoft introduced two new devices, namely the Surface Pro 10 and Surface Laptop 6. These AI-powered PCs cater specifically to business needs, featuring Copilot integration and advanced hardware specifications, such as Intel Core Ultra processors and Neural Processing Units for AI experiences.
Microsoft has also agreed to pay $650 million in order to license Inflection AI’s artificial intelligence software, alongside the company’s recent move to hire the startup’s co-founders, Mustafa Suleyman and Karén Simonyan. MSFT will also hire Inflection AI’s 70 employees. As part of the deal, the company will pay $620 million to license Inflection’s AI models and around $30 million for waiving any legal rights related to the mass hiring.
Shares of the company have gained 11.9% compared with the Zacks Computer & Technology sector’s growth of 11.4% year to date. This Zacks Rank #2 (Buy) company expects fiscal third-quarter 2024 Intelligent Cloud revenues between $26 billion and $26.3 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.