Will Nvidia, Leading This Year's 'AI Rally,' Continue Next Year?

Strong Growth of Competitors Like Broadcom
Big Tech Clients Like Google Also Developing In-House Chips

Nvidia, the leading AI stock, led the 'AI rally' in the U.S. stock market this year, but analysts suggest there will be limitations to maintaining this momentum next year.

On the 29th (local time), Yahoo Finance noted, "Nvidia, which dominated the U.S. stock market this year thanks to the generative AI boom, had a year most companies dream of, with more expectations ahead such as shipments of the high-performance Blackwell chip. However, many challenges remain for next year," highlighting factors that could act as headwinds for Nvidia.

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The first is the growth of competitors. Broadcom, a fabless semiconductor design company that recently surpassed a $1 trillion market capitalization, is a prime example. Since the beginning of the year, Broadcom's stock price has surged 113%. Partnering with Google, Meta Platforms, ByteDance, and others, Broadcom is accelerating AI chip development and challenging Nvidia's ecosystem. Broadcom CEO Hock Tan stated, "Large cloud providers have begun the journey to develop their own customized AI accelerators," and projected that "the company's AI segment will generate business opportunities worth $60 billion to $90 billion by 2027."

Yahoo Finance also noted, "Companies like AMD are trying to take Nvidia's customers and erode Nvidia's market share, which stands at 80-90%," adding, "AMD's MI300X chip line is designed to compete against Nvidia's H100 chip, and Intel, with its Gaudi 3 processor, is among the challengers aiming to take Nvidia's throne."

Another challenge is that Nvidia's largest customers, big tech companies, are rushing to develop their own AI chips to reduce dependence on Nvidia. Google, partnered with Broadcom, has developed its own AI chip TPU (Tensor Processing Unit), while Amazon and Microsoft (MS) each have their own AI chips, 'Trainium2' and 'Miaa100,' respectively. Recently, MS CEO Satya Nadella remarked, "(AI) power is very necessary, but chip supply is not constrained," which fueled concerns about a slowdown in demand for Nvidia chips in the market.

If the AI arms race moves from the 'training' phase to the 'inference' phase, this could also pose a threat to Nvidia. The current surge in demand for Nvidia chips is due to companies expanding data centers and processing vast amounts of data to train their AI models. However, if companies begin focusing more on the 'inference' phase?the actual operation stage rather than training?the power consumption and the amount of Nvidia chips required are expected to ease compared to now.

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Recognizing these prospects, CEO Jensen Huang emphasized multiple times at an event promoting the next-generation 'Blackwell' chip that their products excel not only in learning capabilities but also in inference capabilities. However, Yahoo Finance assessed, "Even if Nvidia's market share declines, it does not necessarily mean Nvidia's business will be worse than before," and suggested that facing stronger competition could actually expand the market pie.

Last week, Nvidia's stock closed at $137.01, down about 2% from the previous session on the New York Stock Exchange. It has risen approximately 176% so far this year.

This content was produced with the assistance of AI translation services.