Nvidia (NVDA.O), opens new tab is expected to deliver another blockbuster earnings report on Wednesday, but a shift in how artificial intelligence is used is raising doubts on how long its dominance in AI chips can last. After years of near-monopoly in chips used to train AI systems, Nvidia is facing competition from tech giants building their own chips to capture demand that is shifting toward processors that run AI systems, respond to queries and carry out tasks in real time. The Reuters Iran Briefing newsletter keeps you informed with the latest developments and analysis of the Iran war.
Traditional rivals Intel (INTC.O), opens new tab and AMD (AMD.O), opens new tab are pushing processors better suited for the smaller, cost-sensitive workloads that dominate the market. Meanwhile, Alphabet (GOOGL.O), opens new tab has emerged as a key challenger, striking deals worth tens of billions of dollars for its custom tensor processing units. Amazon's chip business, including its Trainium processors, is also gaining ground. "It's less so Nvidia versus TPUs, Nvidia versus AMD. I think it's more: is the Nvidia ecosystem as dominant moving forward, as some of these new inference workloads start to proliferate," said John Belton, portfolio manager at Gabelli Funds, which holds Nvidia shares.
Nvidia's stock has risen about 19% this year, lagging a two-fold surge in AMD (AMD.O), opens new tab, Intel (INTC.O), opens new tab and Arm , as well as a 27% gain in Alphabet.
To defend its position, the chipmaker unveiled a new central processor and AI system built on technology from Groq in March, an inference-focused startup it bought.
Those chips are not included in Nvidia's forecast for $1 trillion in sales from Blackwell and Rubin platforms by 2027 end, leaving investors to closely watch for signs of a new growth engine. Investors will also be looking out for any sign of supply constraints. Nvidia's spending on supply commitments jumped from $50.3 billion to $95.2
billion between the last two quarters of its latest fiscal year, but it has largely avoided a hit from a global memory chip crunch that have affected Qualcomm and Apple.
