Crushing the Competition

Nvidia’s Blackwell AI processors continue to dominate the chip market.

Two short years ago, Nvidia Corp’s (NASDAQ: NVDA) sales were growing in line with other semiconductor stocks at roughly 24%.

But then ChatGPT came online, and Nvidia became The Real 1%.

Annual sales at Nvidia have increased over 100% for each of the last four quarters, with the latest quarter showing an increase of 153%

Meanwhile, sales growth across the semiconductor industry collapsed to a meager 2%, on average.

It’s now the Only Game in Town.

As former Google CEO Eric Schmidt said this summer, “If $300 billion is all going to go to Nvidia, you know what to do in the stock market.”

This unprecedented growth and dominance doesn’t come without growing pains, however.

Supply chain challenges, particularly in delivering its Blackwell GB200 chip servers, have pushed back continued growth. Production issues have led to delays, prompting a shift in focus to the forthcoming GB300 model, expected mid-next year.

But if it sorts those issues out, Nvidia could soon be twice the size of Apple (NASDAQ: AAPL).

U.S. export restrictions on semiconductor technology to China also introduced complexities, though it’s worth noting that Nvidia’s revenue from China accounts for less than 20% of total sales.

All that revenue (49% of which flows to the bottom line as competitive profits) leaves plenty of cash flow for Nvidia to expand its influence through strategic investments, such as its recent participation in a $700 million funding round for Nebius, an AI infrastructure company, allowing Nvidia to integrate its Blackwell series GPUs into Nebius’s cloud services.

Nvidia reported a couple of weeks ago, And you can see my updated analysis in this Capital InFocus report.

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Think Free. Be Free.

Don Yocham, CFA

Managing Editor of The Capital List