Key Points
Investors have been worried that the competition will eventually eat Nvidia's lunch.
However, recent developments show that the hunted has now become the hunter.
Nvidia still has plenty of growth ahead, and its price is downright compelling.
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Once the province of hardcore gamers, Nvidia (NASDAQ:NVDA) wasn't content to confine itself to a niche. Back in 2013, CEO Jensen Huang made a big bet on artificial intelligence (AI) long before it was fashionable. In doing so, he put Nvidia on a path to success that still hasn't peaked, as its processors are the gold standard powering the AI revolution. As a result, it's the first and only company (thus far) to hit a $5 trillion valuation, and its revenue growth continues to accelerate.
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The biggest concern among shareholders is that the increasing competition will eventually "chip" away at its lead and the stock will ultimately fall. However, Nvidia just showed why it shouldn't be underestimated, flipping the script on its competitors -- and investors shouldn't sleep on the company's latest strategic move.
Image source: Nvidia.
The competition is already here
The popular narrative over the past year or so has been that Nvidia will soon peak, as competitors are developing alternatives to the company's industry-leading graphics processing units (GPUs) -- and those concerns are justified. Here are just a few examples of the growing competition in the AI chip space.
Advanced Micro Devices (NASDAQ:AMD) has been nipping at Nvidia's heels as long as anyone can remember. Most recently, AMD developed the Instinct MI455X AI chip, which many view as a viable alternative to Nvidia's Vera Rubin VR200 processors. While Nvidia still leads in terms of sheer computational horsepower, AMD offers lower power consumption, making it a more affordable option.
Alphabet's (NASDAQ:GOOGL) (NASDAQ:GOOG) Google has been developing its custom Tensor Processing Units (TPUs) for internal use for more than a decade. The company recently introduced the eighth generation of these chips, unveiling the TPU 8t and the TPU 8i, specifically designed for AI training and inference, respectively. More importantly, Google announced that it will begin selling these chips to "a select group of customers" to expand its market opportunity.
Amazon (NASDAQ:AMZN) began developing specialized processors more than a decade ago with the acquisition of Annapurna Labs. Amazon Web Services (AWS), the company's cloud computing division, recently introduced the latest-generation Trainium3 chip and Inferentia2 chips for AI training and inference, respectively. In the past, Amazon was content to reserve those chips for use by its cloud customers. However, in the company's 2025 shareholder letter, CEO Andy Jassey said, "There's so much demand for our chips that it's quite possible we'll sell racks of them to third parties in the future."
Broadcom (NASDAQ:AVGO) is the largest provider of Application-Specific Integrated Circuits (ASICs), specialty chips that can be customized to be more efficient for specific tasks. Google's TPUs are one example, but Broadcom also designs ASICs for Meta Platforms, AI start-ups Anthropic and OpenAI, and others. These chips are generally less flexible, but more cost-effective than GPUs -- again for specific tasks.
As you can see, concerns about the growing competition are well-founded.
Flipping the narrative
At the company's GPU Technology Conference (GTC) Taipei this week, Nvidia made an announcement that flipped the narrative about the competition.
Nvidia unveiled the RTX Spark, a processor designed to bring the personal computer (PC) into the age of AI. The chip is designed to support the use of AI agents and "reinvents the Windows PC for the era of personal AI agents." Nvidia partnered with Microsoft to develop the groundbreaking chip, saying, "The PC is being reinvented." The RTX Spark puts Qualcomm's Snapdragon PC chip in the crosshairs, opening up a new market for Nvidia.
The other item of note was the introduction of the Vera CPU, also built for the era of AI agents. Nvidia describes the chip as "a new class of processor," which is 1.8 times faster than existing x86 architecture for running AI systems. This puts both Intel and AMD on notice, as they are among the largest suppliers of the legacy x86 processors.
Investors have been so caught up in concerns that the competition was coming for Nvidia that they failed to consider that the AI chipmaker has more worlds to conquer. During the company's recentearnings call CFO Colette Kress noted that the "Vera CPU opens up a brand-new $200 billion" market for Nvidia.
This serves as an important reminder that while data center GPUs are still the mainstay of Nvidia's business, they're not the company's only business. Moreover, Nvidia is a formidable competitor and should never be taken for granted.
Investors would do well not to underestimate Nvidia. The company's revenue grew 85% year over year in its fiscal 2027 first quarter (ended April 26), and it's guiding for 95% growth in Q2. Add to that the CPU and PC opportunity, and it's easy to imagine Nvidia's growth continuing to accelerate.
Despite all that opportunity, Nvidia stock is a compelling opportunity at less than 25 times forward earnings.
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Danny Vena, CPA has positions in Alphabet, Amazon, Broadcom, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Broadcom, Intel, Meta Platforms, Microsoft, Nvidia, and Qualcomm. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
