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Nvidia to offer metaverse services under partnership deal with Microsoft

Nvidia (NASDAQ: NVDA) has announced that it will be teaming up with Microsoft (NASDAQ: MSFT) to offer firms building in the metaverse a range of services that will assist in building realistic virtual worlds.

Nvidia CEO Jensen Huang broke the news to attendees of the firm’s GTC developer conference, saying the collaboration would open the door to endless possibilities. He confirmed that the alliance between the two tech giants will result in Microsoft providing Nvidia with computing services via Azure, the firm’s cloud computing offering.

The alliance will also see the integration between Nvidia’s Omniverse and Microsoft 365 programs like Teams and OneDrive, which Huang says will allow deeper cooperation between developers. In his speech, Huang hinted that the services provided by Microsoft and Nvidia to developers would be paid for, but details of its pricing were not revealed.

The announcement was greeted with enthusiasm among attendees, resulting in BMW (NASDAQ: BMWYY) board member Milan Nedeljković stating that the automobile manufacturer will be using the service in its upcoming virtual factory.

Nvidia’s interest in the metaverse and virtual worlds has come after a dwindling financial situation triggered by Ethereum’s switch to a Proof-of-Stake (PoS) consensus mechanism, eliminating mining activities. Prior to the switch, Nvidia’s chips were widely used by Ethereum miners, prompting the chipmaker to explore other revenue models.

“The world’s largest companies are racing to digitize every aspect of their business and reinvent themselves into software-defined technology companies,” said Huang. “NVIDIA AI and Omniverse supercharge industrial digitalization.”

Since the announcement, Nvidia’s stock has been on an upward trajectory, rising by 12% over the last five days to trade at $299.18. Microsoft’s stock is also riding the wave of the announcement, gaining nearly 2% in the last 24 hours, trading at around the $276 mark.

Microsoft hedges its risk

In 2021, Microsoft set up its Industrial Metaverse Core team, but months after the group’s formation, the tech giant announced the layoffs of the department’s 100 employees. The cuts were attributed to the unsavory macroeconomic conditions and the inherent risks associated with innovating without regulatory clarity.

Experts believe that Microsoft is banking on the proliferation of its Windows operating system to catch up with other innovators in the space. However, a company spokesperson stated that the firm is still focusing on the industrial metaverse despite the job cuts.

“Microsoft is pretty confident that they can always catch up because of Windows, their installed base. So for them, they don’t have to take all the risk and be the first one trying to solve regulatory uncertainty around the metaverse,” said Columbia University professor Daniel Keum.

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