1 Artificial Intelligence (AI) Stock That Could Be Bigger Than Nvidia in 5 Years
Nvidia (NASDAQ: NVDA) has built an impressive business model over the past two decades. The company’s CUDA developer platform, released in 2006, provided a programming interface, compiler, driver, runtime environment, and toolkit. This allowed developers to customize and accelerate applications, giving Nvidia’s GPUs a competitive advantage.
As deep learning grew in popularity in the late 2010s, CUDA became the standard for GPU acceleration. Because most tools were built for CUDA, it was difficult for users to switch to other GPUs, essentially ensuring they would keep using Nvidia’s products. This dynamic is one key factor in Nvidia’s ascent to a $3 trillion business. However, as history shows, competition in the GPU market will intensify over time. Another company may eventually eclipse Nvidia.
This Chipmaker is Catching Up with Nvidia
Advanced Micro Devices (NASDAQ: AMD) is often considered an afterthought in the race for AI GPU supremacy. Most estimates indicate that Nvidia controls at least 80% of the AI GPU market, with some estimates reaching 90% or higher. Nvidia is undoubtedly the leading supplier of critical AI components such as GPUs.
However, past chip cycles demonstrate that market leadership can change, sometimes within relatively short periods. In 2006, Intel had a commanding lead in graphics chips, with a 40% market share. AMD was in second place with just over 25%, and Nvidia trailed with just under 20%. A year later, Intel still led at roughly 39%, but AMD and Nvidia had swapped positions. Nvidia held nearly 30% of the market, while AMD slipped below 20%.
Another example: In 2021, Intel held 64% of the market for data center chips. Nvidia had 27%, and AMD had 9%. Two years later, Intel had dropped to just 26%, Nvidia had soared to 66%, and AMD remained at 8%. These shifts show that chip leads can change hands quickly.
Which companies might eventually catch up with Nvidia? While the future remains uncertain, AMD is investing heavily in competing in AI over the long term. Last quarter, the company introduced its MI325X AI accelerator chip, which will directly compete with Nvidia’s H200 GPUs. AMD also recently unveiled its next-generation MI350 chips, expected to compete with Nvidia’s next-generation Blackwell chips by mid-2025. AMD CEO Lisa Su wants the company to lead the AI market within a decade. “This is the beginning, not the end, of the AI race,” she told investors late last year.
Will AMD Dominate AI GPUs by 2030?
Nvidia’s dominance in the AI GPU market doesn’t necessarily stem from having superior chips across the board, though they may have those right now. Over time, the combined research and development budgets of competing chipmakers will likely narrow the gap. What makes Nvidia’s products unique is that the company controls both the hardware and software components, creating robust developer and business lock-in.
However, AMD is making inroads with customers with its latest generation of chips. Microsoft and Meta Platforms have signed on as customers for its current generation of MI300 AI GPUs. AMD estimates that the addressable market for AI chips will reach $400 billion by 2027. Considering that combined AI data center chip sales for AMD and Nvidia are just over $30 billion today, there should be considerable room for AMD to grow, even if Nvidia remains at the top for years to come.
While it will be difficult for AMD to overtake Nvidia within the next five years, AMD remains a promising AI GPU investment.
