Nvidia Deal With TikTok Owner Could Drive Its Stock Higher

By Douglas A. McIntyre Updated Dec 9, 7:05AM EST · Published Dec 8, 8:32AM EST

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Nvidia Deal With TikTok Owner Could Drive Its Stock Higher — © 24/7 Wall Street

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Key Points

TikTok owner ByteDance has started to buy Nvidia chips for its AI applications. That will help the U.S. company.
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The Financial Times reports that TikTok owner ByteDance wants to be the leader in AI in China. It has begun buying Nvidia Corp. (NASDAQ: NVDA | NVDA Price Prediction) chips to do so. This new market and major customer could be a catalyst for driving the U.S. chip company’s stock higher after what has already been an extraordinary run.

Due to limitations placed on China sales, Nvidia can only sell ByteDance chips that are less powerful than those available in the United States and throughout much of the world. These are called Nvidia’s H20 chips. However, the Financial Times says the Chinese company can buy the more powerful H100 and Blackwell chips for data centers it owns outside the United States.

Chinese companies, including Baidu and Huawei, have started to build their own AI chips. This is mostly because the U.S. blocks the exports of Nvidia’s most advanced products. However, it is hard to say whether these chips can be competitive, which may be why ByteDance is acquiring Nvidia chips for data centers outside its country.

China’s companies continue to try to catch up with the United States in the AI sector. If it can’t, the United States will continue to lead significantly in business and military applications.

Nvidia may find demand for its most advanced chips is limited enough by demand that the ByteDance move into the sector will not improve its fortunes in the short term. However, Nvidia is the only AI option for companies that want the best products in the industry. That creates ByteDance demand even if it cannot be fulfilled immediately,

Nvidia does not need more customers, but that does not mean it will not get them. Its revenue rose 94% in the most recent quarter to $35.1 billion year over year, and per-share earnings were up 111% to $0.78. ByteDance shows that if Nvidia can keep producing more chips, there is even more demand.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.