• Microsoft has been feuding with Nvidia, The Information reported.
  • Jensen Huang's attempt to control how Nvidia chips are used led to a standoff with Microsoft.
  • The dispute lasted weeks and eventually reached Microsoft CEO Satya Nadella's desk.

Microsoft has reportedly been feuding with Nvidia.

On Tuesday, the chipmaker overtook Microsoft to claim the title of the world's most valuable company — but behind the scenes, tensions have been bubbling for months.

The Information reported that Nvidia CEO Jensen Huang's tight control over how chips are allocated and installed has rubbed Microsoft the wrong way.

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Huang previously said the company dictates how chips are allocated to stop companies from stockpiling them amid limited supply.

However, when these efforts extended to telling companies how their GPUs should be installed in data centers, it led to a standoff with key customer Microsoft, The Information report said.

It added that when Nvidia tried to convince the Big Tech company to buy its next flagship chip — the GB200 — exactly as it had been designed in the server rack, it resulted in a feud.

Installing the chips the way Nvidia wanted would have reportedly hindered Microsoft's ability to switch to different AI chips.

The dispute with the chipmaker over server racks lasted several weeks and even reached Microsoft CEO Satya Nadella's desk, the report said, citing people involved.

Microsoft eventually won out when Nvidia backed down and agreed to let the Big Tech company design its own custom racks, The Information reported.

Representatives for Nvidia and Microsoft did not immediately respond to a request for comment from Business Insider, made outside normal working hours.

On Tuesday, Nvidia stock rose 4%, helping push its market capitalization past that of Microsoft and dethrone the company as the world's most valuable. The chipmaker boasted a market value of $3.338 trillion, edging out Microsoft's $3.326 trillion market cap by $12 billion.