Nvidia and Meta – Intel Killer

Deal opens up the CPU market for everyone else.

• Nvidia and Meta have extended their long-term supply arrangement for GPUs, but critically, Nvidia is now also supplying the CPU-only segment in a sign that the move towards Arm in the data centre is accelerating, which is more terrible news for Intel.
• This deal also includes Grace Blackwell GB300 and Vera Rubin GPU systems, which I suspect will be used predominantly for training, meaning that there is still plenty to chase after for everyone else.
• Meta will be spending around $125bn on capital expenditure in 2026, which amounts to around 3GW of data centre capacity, and if this were all Nvidia, then there would not be much left for Google, Amazon, Microsoft etc.
• Hence, I think that the market for data centre silicon is going to start broadening considerably as the hyperscalers look to mix and match suppliers based on their requirements for inference.
• It is clear that the market is rapidly shifting to inference, where the Nvidia lock-in is not as strong and where builders of data centres have an increasing array of options to choose from.
• The market has long been full of rumours regarding newcomers to this market, such as Qualcomm and MediaTek doing deals with hyperscalers, and if one looks at the conference call transcripts, one can see evidence of precisely this.
• Hence, I am not surprised to see Nvidia extend and expand its deal with Meta, and this does not preclude in any way other companies also winning business with Meta, given that there is so much business to go around at the moment.
• What is new in this transaction is the purchase of Grace CPU-only, which will be used for the regular CPU tasks such as servicing Meta’s apps, running agents and so on.
• Meta and Nvidia have stated that the main reason for this is to optimise performance per watt, which is becoming increasingly important in data centres built in Western countries.
• Much of the grid in most Western countries has not been meaningfully expanded for many years, and the sudden, step-wise increase in demand for power is causing widespread consternation.
• One option is to go for standalone power, which is where small modular nuclear reactors (SMRs) are an ideal option, but this requires regulatory clearance, which is often very slow to be given.
• In the meantime, the focus is switching to power optimisation, which is where Arm-based systems have long had an advantage over x86.
• This segment of the market has long been dominated by Intel, where efforts by Arm-based suppliers have often floundered due to the legacy software running these systems not being available for the Arm instruction set.
• This deal with Meta signals that the Arm replacement of x86 in the data centre is finally gathering a lot of momentum, meaning that the software problem will rapidly become something in the past.
• Hence, while one could think that Meta has become an Nvidia-only shop, I think that the reverse is true.
• Meta moving its CPU loads over to Arm means that the door is open for everyone to come in and take a piece of the $125bn on offer this year.
• I also get the impression that Meta has unique requirements, meaning that it will use both custom silicon as well as systems that are off the shelf.
• Hence, I am expecting to see a number of deals announced over the coming months that will involve new suppliers of ARM-based CPUs for the data centre, as well as deals to design and implement custom accelerators for inference.
• The real loser here is Intel, as it is now open season on all of its main product lines, including PCs and now the data centre.
• The company is also in such disarray that it appears incapable of doing very much to deal with the sharks who show every sign of eating all of its business.
• This will take some time, but the writing is on the wall, which is only made clearer by this announcement.
• I think that the last shoe to drop will be when AMD announces an Arm-based CPU for PCs and the data centre, at which point the trickle, which has already become a stream, becomes a torrent.
• There remains no real price that would convince me to invest in Intel, whose core asset looks increasingly obsolete with every day that passes.