Microsoft Corp. (MSFT  ) has reportedly acquired nearly twice as many Nvidia Corp. (NVDA  ) AI chips as its closest competitors. This strategic investment is aimed at bolstering its AI capabilities, particularly for its Azure cloud services.

What Happened: Analysts at technology consultancy Omdia estimate that Microsoft has purchased approximately 485,000 of Nvidia "Hopper" AI chips this year.

This acquisition is significant as it doubles the number acquired by its nearest rival, Meta Platforms Inc. (META  ), which bought 224,000 chips, Financial Times reported on Wednesday.

The demand for Nvidia's advanced GPUs has surged since the introduction of ChatGPT, prompting tech giants to invest heavily in AI infrastructure. Analysts from Omdia estimate that ByteDance and Tencent each ordered about 230,000 Nvidia chips, including the H20 model, tailored for Chinese markets.

Microsoft's aggressive expansion in AI infrastructure is partly driven by its $13 billion investment in OpenAI. The company aims to leverage its AI capabilities for both internal services and customer offerings through Azure. Despite competition, Microsoft continues to rely on Nvidia's chips while developing its own AI accelerators.

Why It Matters: The acquisition of Nvidia chips by Microsoft underscores the tech giant's strategic focus on enhancing its AI infrastructure. Nvidia's dominance in the AI semiconductor market is well-documented, with CNBC's Jim Cramer emphasizing that no company can rival Nvidia's technological superiority.

Nvidia posted $35.1 billion in revenue in the third quarter, with data center revenue alone reaching $30.8 billion, underscoring its pivotal role in AI infrastructure.

However, Nvidia's chips have faced challenges, such as overheating issues in its Blackwell AI chips, impacting companies like Meta and Microsoft.

Despite these challenges, Nvidia's chips remain integral to AI advancements, and Microsoft's substantial investment reflects its commitment to staying at the forefront of AI technology.