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Nvidia remains the king of AI infrastructure.
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AMD is carving out an important niche with AI inference.
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Broadcom is a networking giant that also has a big opportunity with custom AI chips.
Nvidia (NASDAQ: NVDA) recently said it expects artificial intelligence (AI) infrastructure spending to jump to between $3 trillion and $4 trillion by the end of the decade. That's just a massive number. Cloud computing and other big technology companies continue to race to build out AI capacity, which puts chipmakers in an enviable position.
Nvidia has been the big winner so far, but it's not the only one. Let's look at the three chipmakers set to benefit most from this $3 trillion opportunity.
Nvidia is working at the center of AI. Its graphics processing units (GPUs) went from powering video games to becoming the standard for training large language models, and the company managed to turn that into a wide moat. Its CUDA software platform was the key to this happening. By making it free and getting it into research labs and universities early on, Nvidia ensured that developers learned to program GPUs on CUDA. Once that happened, companies were locked into its software ecosystem.
Nvidia has been just as smart on the networking side as well. Its proprietary NVLink connection allows GPUs to work together as a single unit, a huge benefit with AI workloads. Meanwhile, its acquisition of Mellanox gave it even more strength in networking, ensuring its chips could support increasingly massive AI clusters. The strength of its networking portfolio showed up last quarter, with networking data center revenue nearly doubling to $7.3 billion.
With both software and networking advantages, Nvidia is positioned to continue to be the leader in the AI infrastructure buildout. While it may not hold its 90% GPU market share, it's still the company to beat.
Advanced Micro Devices (NASDAQ: AMD) lives in Nvidia's shadow, but the market is shifting in a way that plays to AMD's strengths. Training dominated the first wave of AI, and Nvidia's CUDA gave it the edge. However, inference is now where demand is growing fastest, and AMD has already won some important business here. Several of the largest AI companies are using its GPUs for inference, and it counts seven of the top 10 AI players as customers.
AMD is also part of the UALink Consortium, which is trying to build an open interconnect standard to rival Nvidia's NVLink. If that happens, it could give data centers more options for building out clusters and cut into one of Nvidia's advantages. That's still getting started, but it shows how AMD is working with others to narrow Nvidia's moat.