Nvidia’s AI Boom Faces New Challenges

Chipmaker crushes earnings, but rivals are closing in

February 27, 2025

Dear Reader,

Nvidia’s success continues, with fourth quarter revenue soaring 78% to $39.3 billion, and the full year revenue doubling to $130.5 billion, the company also delivered a strong outlook for 2025, projecting $43 billion in revenue, a sign that AI demand remains red hot.

But despite the blockbuster numbers, the stock remained flat in extended trading as analysts raised concerns about rising competition and slowing growth.

Key Takeaways from Nvidia’s Earnings:

  • AI dominance continues: Nvidia’s Blackwell AI chips generated $11 billion in sales last quarter, marking the fastest product ramp in company history. CEO Jensen Huang called the demand “amazing.”

  • Data center revenue explodes: Now accounting for 91% of total sales, Nvidia’s $35.6 billion data center business is up 93% year over year, reflecting AI’s growing role in cloud computing and enterprise applications.

  • Stock performance lags: Despite strong earnings, investors hesitated, concerned about competition and whether Nvidia’s rapid growth can continue.

But The Competition Is Catching Up.

Nvidia’s biggest threat, it’s rising competition.

  • Huawei emerges as a key rival: Even with U.S. sanctions, Huawei has gained ground in AI chips, networking, and cloud computing, making it a formidable challenger in China.

  • Tech giants are building their own chips: Amazon, Microsoft, and Google are developing custom AI processors, reducing their dependence on Nvidia’s GPUs. Huang insists that “designing a chip doesn’t mean it gets deployed,” but Big Tech’s investment in AI hardware is impossible to ignore.

  • DeepSeek’s R1 model raises questions: New AI efficiency breakthroughs could reduce the need for Nvidia’s most powerful chips, shifting demand toward lower-cost alternatives. Nvidia argues that next-gen AI will require 100x more computing power, but skeptics remain.

What’s Next?

Nvidia’s AI chips remain the gold standard, but the company is facing a more competitive landscape than ever before. Investors are watching closely as new AI models and rival chipmakers challenge Nvidia’s dominance.

Will Nvidia continue to lead the AI revolution, or are we seeing the start of a power shift?

We’ll keep you posted

Street Fin Gazette