Nvidia (NVDA) Stock: What ByteDance’s $2.5B Blackwell Build Means for Demand

TLDR

• ByteDance is building an AI computing cluster in Malaysia using Nvidia Blackwell chips, working with Southeast Asian cloud firm Aolani Cloud.
• The project involves at least 500 Nvidia Blackwell servers and roughly 36,000 B200 AI chips.
• The total cost of the project could exceed $2.5 billion.
• ByteDance is building outside China to work around U.S. export restrictions on advanced AI chips sold to Chinese firms.
• Aolani is buying the servers from Aivres, a company that assembles processors using Nvidia chips, and says it follows all export control rules.

ByteDance, the parent company of TikTok, is reportedly building a major AI computing cluster in Malaysia using Nvidia’s latest Blackwell chips, according to a Wall Street Journal report published Friday.

NVIDIA Corporation, NVDA

The project involves working with a Southeast Asian cloud company called Aolani Cloud to install at least 500 Nvidia Blackwell servers. That equates to around 36,000 B200 AI chips in total.

The cost of the project is expected to exceed $2.5 billion.

Aolani is sourcing the servers from Aivres, a company that assembles processors using Nvidia chips. Aolani said it follows all export control rules and provides cloud services to customers across Asia and other regions.

ByteDance plans to use the computing power for AI research and development outside China, and to support growing global demand for its AI products and services.

Why Malaysia?

The move makes sense when you consider the regulatory backdrop. Nvidia is blocked by the U.S. government from selling its most advanced AI chips directly to China.

Chinese tech companies have found ways to continue accessing cutting-edge hardware by setting up data centers in other countries. ByteDance has reportedly used B200 Nvidia chips at a center in Indonesia as well.

By building in Malaysia, ByteDance keeps itself within legal bounds while still getting access to the hardware it needs to stay competitive.

Earlier reports indicated the U.S. government had discussed allowing ByteDance to purchase some Nvidia chips, including the H200 model, under specific conditions. At the time, Nvidia had not agreed to those terms.

ByteDance has been pushing hard on AI. The company has released multiple AI applications in China and internationally. Its AI video generation model, Seedance, recently picked up considerable attention online.

What It Means for Nvidia

For Nvidia, the Malaysia project is another data point showing just how strong demand remains for its AI chips, even with export restrictions in place.

Large technology companies are still committing billions of dollars to secure Nvidia hardware, routing around restrictions by setting up infrastructure in third-party countries.

Nvidia stock was down 1.55% at the time of reporting. According to TipRanks, NVDA carries a Strong Buy consensus rating, based on 38 Buy ratings and one Hold over the last three months. The average price target sits at $273.61, implying roughly 49% upside from current levels.

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