Nivida is set to face competition after a new report from The Information states that Apple is developing its first server chip designed for artificial intelligence. 

Internally code-named "Baltra," Apple's AI sever chip is expected to be ready for series production by 2026. The development of Baltra involves collaboration with Broadcom for networking technology, a critical component for AI processing.

Unlike CEO Tim Cook's competitors, Apple has chosen "to develop its own server chip, which is intended for internal use rather than as a consumer product, also highlights its longstanding preference to not buy chips from Nvidia, which dominates the market for AI chips," according to the report, citing three people with direct knowledge of the project. 

The Information added more color: 

Last week, Apple said it was testing an Amazon-designed chip for training its large language models. Apple will likely use the new AI chip it is developing for inference, where the chip processes new data—such as a user describing a possible image—and applies them to the models to generate an output, like producing the image itself.

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Meanwhile, a large portion of the AI chip comprises many duplicates of the Apple Neural Engine, which speeds up AI tasks, one of the people said. Apple initially designed the ANE years ago for an inference chip intended for its now-defunct self-driving car. The design later made its way into iPhones as machine-learning features for photography and voice recognition took off, according to multiple people familiar with its design.

Apple's move to enter the AI race began this past fall with the rollout of some of its first generative AI features, known as Apple Intelligence, which has since had a dismal response from consumers.

According to Apple's website, the new AI feature can "understand and create language and images; prioritize and summarize notifications, mail, and messages; and draw from the personal information on your device to simplify and accelerate everyday tasks. " 

The Information pointed out, "But designing an AI chip isn't a surefire solution—with the exception of Google, many of those firms still rely heavily on Nvidia chips for training their models because of the higher computing requirements of that process." 

In markets, Apple shares were up half a percentage point shortly after the cash session opened, while Broadcom shares were up 6%. Meanwhile, Nvidia shares were unphased by the report, up 2%. 

Here's what X users said about the report...

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