Nvidia's Margins, Rivals' Opportunity

Nvidia's dominance in the AI chip market has resulted in substantial profit margins, attracting increased competition. While Nvidia holds a significant market share, companies like Google and AMD are vying for a piece of the pie. Google is promoting its Tensor Processing Units (TPUs) directly to major tech and financial firms, aiming for integration within their data centres. Meta is reportedly in discussions to invest billions in TPUs for its infrastructure by 2027.

AMD is also stepping up its game, with CEO Lisa Su claiming that their latest chips outperform Nvidia's in efficiency. AMD's ROCm platform is designed to compete with Nvidia's CUDA, offering a non-proprietary, open stack with potential cost savings. While Nvidia maintains a strong lead with its next-gen Rubin platform expected in mass production by 2026, increased competition could pressure its prices and market share.

The AI chip market is projected to reach $500 billion by 2028, making it a lucrative arena for these tech giants. As the market evolves, competition is shifting towards technological ecosystems and next-generation product development. Companies are also exploring custom silicon to reduce dependency and control costs.