Nvidia is set to keep its dominance in the AI chip market with an estimated 80% to 85% market share in the next 12 to 18 months, even as Amazon and Broadcom join the race.
According to Bank of America analyst Vivek Arya, speaking on Yahoo Finance’s “Opening Bid” podcast with executive editor Brian Sozzi, Nvidia’s comprehensive package offerings and strategic partnerships set it apart from its rivals. Arya highlighted, “[An Nvidia chip] is not just a chip.”
The analyst noted that rivals do not possess the software competence and corporate relationships that Nvidia possesses. Arya said, “There are no software skills, no partner to take enterprise opportunities for you.” That is the value add that Nvidia has.”
He further noted that while other companies are making strides in the sector, such as Amazon’s $8 billion collaboration with Anthropic and Google’s introduction of the Willow AI chip supercomputer, they still fall short in creating an ecosystem comparable to Nvidia’s.
Nvidia’s data center sales are projected to reach $200 billion this year
As for the financial outlook, Nvidia’s data center sales are expected to rise from $110 billion in 2024 to $200 billion in 2025. On the other hand, Broadcom and Marvell are projected to generate sales of $17 billion and between $2 – $4 billion, respectively, in the same period.
Arya also highlighted the role of scale in the semiconductor industry and said, “In semiconductors, incumbency scale matters.” This is a tough one to do unless the incumbent makes a blunder; they are usually the first to be contacted when there is a shortage in the supply chain market.
Additionally, Arya dispelled concerns about immediate technological shifts, advising against getting “frazzled over what may or may not happen in technology three years from now in such a dynamically changing market.”
He concluded with a word on the competition in the tech industry, saying, “It is like saying that a sitcom is better than Netflix, so I can beat Netflix.” That’s not the game anymore.”
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