Nvidia’s AI advantage is moving beyond the GPU
Before this week, the dominant story about Nvidia went something like this: For the first few years of the AI boom, Nvidia was the only source for…
Summary
Before this week, the dominant story about Nvidia went something like this: For the first few years of the AI boom, Nvidia was the only source for state-of-the-art GPUs, which became immensely profitable as the industry scaled out. In the last few years, hyperscalers like Amazon and Google have started building their own chips, and Nvidia is no longer the only game in town, leading many investors to wonder how durable its advantage really is. After growing its market cap 10x between the start of 2023 and mid-2025, Nvidia shares have been on a more modest trajectory for the past year, driven by concerns about GPU competition. A new narrative has taken shape since the company’s earnings on Wednesday and investors are starting to realize that Nvidia’s advantage goes far beyond GPUs.
Positives
- After growing its market cap 10x between the start of 2023 and mid-2025, Nvidia shares have been on a more modest trajectory for the past year, driven by concerns about GPU competition.
- As AI’s compute grows into the gigawatt scale, orchestration has become an increasingly complex task.
- Not surprisingly, Nvidia has built much of the state-of-the-art hardware needed to handle it, giving the company a huge advantage in the systems that surround the GPU even as it sees increased competition on the GPUs themselves.
- For all the talk of compute as a commodity, it’s still incredibly difficult to operate a megascale data center at peak efficiency — and as deployments get bigger and faster, that challenge is only growing.
Risks & concerns
- After growing its market cap 10x between the start of 2023 and mid-2025, Nvidia shares have been on a more modest trajectory for the past year, driven by concerns about GPU competition.