From gaming to AI giant
Nvidia specializes in the design of processors and chipsets, including graphics processing units (GPUs) for the gaming and data center markets. Nvidia’s Graphics segment focuses on consumer end markets, including the GeForce GPU series for gaming and PCs. The Compute & Networking segment includes products developed for AI and machine learning activities within data center environments. Riding high on the AI wave, Nvidia’s data center revenue exploded in its 2024 fiscal year, reaching 47.5 billion U.S. dollars – a 216 percent increase compared to the previous year. Nvidia's A100, and its successor the H100, have been the favored chips to help power AI, sourced by the likes of Meta and Microsoft to develop generative AI programs.Tech firms are jumping on the AI hype train
Nvidia’s competitors in the GPU market include suppliers of both discrete and integrated graphics, markets that it dominates along with AMD and Intel. In addition to traditional chip firms, Nvidia is also beginning to observe competition arising from cloud computing providers in the form of Microsoft, Google, and Amazon. These companies are now looking to develop their own in-house chips to diversify supply lines and become less reliant on one source for AI chips. Moving forward, firms that can combine software and infrastructure packages with specialized in-house chips are set to prevail as the custom chip trend continues.U.S.-China tensions pose a threat to Nvidia
The company’s future growth has been slightly tempered as worries grow over the impact of export controls the United States government has already and continues to impose on China. With the Chinese market accounting for close to 20 percent of the company’s revenue, restrictions that affect what the company can sell could have a serious impact on Nvidia’s financials. As such, Nvidia will need to remain agile to maintain its lead in the market, designing new chip lineups to comply with tightened export rules, while warding off growing competition from tech giants closer to home.
