Nvidia, the powerhouse behind accelerated computing and AI, has seen its stock soar over 171% in the past year. However, cracks are starting to appear in its dominance. DA Davidson analyst Gil Luria has raised concerns about Nvidia’s reliance on just four major customers: Microsoft, Meta, Amazon, and Google. These tech giants are increasingly developing their own chips, potentially reducing their dependence on Nvidia.
Adding to Nvidia’s woes, analysts have cautioned against the hype surrounding the AI frenzy, questioning the sustainability of the enormous investments being made. Delays in product releases like Nvidia’s Blackwell GPUs have further fueled these concerns.
This burgeoning AI market is attracting new players eager to capitalize on the growth. Cerebras Systems Inc, a company specializing in AI computing, recently filed for an initial public offering (IPO) with the Securities and Exchange Commission (SEC). Cerebras’ flagship system, CS-3, is designed to handle AI workloads and power AI supercomputers, directly competing with Nvidia.
Cerebras’ sales have skyrocketed, reaching $136.4 million in the first half of 2024, a significant jump from just $8.7 million a year ago. The company is aiming to raise up to $1 billion in its IPO, valuing it between $7 billion and $8 billion.
Meanwhile, in China, Huawei Technologies is stepping up its game by offering Ascend 910C processor samples to Chinese hyperscalars, which are currently Nvidia customers. This move comes as China intensifies its efforts to promote domestic AI chips from companies like Cambricon Technologies Corp and Huawei, a response to US sanctions on advanced semiconductor technology.
The increased competition and concerns about the long-term viability of the AI boom have cast a shadow on Nvidia’s stock performance. NVDA shares were down 1.19% on Tuesday, closing at $120.01. This evolving landscape suggests that the race for AI dominance is heating up, with Nvidia facing a formidable challenge from both established tech giants and ambitious startups.
