Nvidia CEO to Defend AI Dominance Amid Rising Competition and Cost Concerns
As Nvidia CEO Jensen Huang takes the stage at the company’s annual developer conference this week, he faces the challenge of defending Nvidia’s near $3 trillion dominance in the AI chip market. With pressure mounting on major customers to control the soaring costs of artificial intelligence, Nvidia’s leadership in the industry is under scrutiny.
Nvidia’s conference follows a shake-up in the AI landscape, as China’s DeepSeek unveiled a competitive chatbot that reportedly requires less computing power than its rivals. This development rattled U.S. markets, causing Nvidia’s stock to drop, as the company’s explosive revenue growth quadrupling to $130.5 billion in three years has been largely driven by selling high-powered chips priced at tens of thousands of dollars each.
At the conference, Nvidia is expected to unveil details of its next-generation chip system, Vera Rubin, named after the astronomer who pioneered dark matter research. The system is set for mass production later this year, even as its predecessor, the David Blackwell chip, faces production delays that have impacted Nvidia’s profit margins.
AI Market Shifts: Training vs. Inference
Nvidia’s stronghold is in AI training, the process of feeding large datasets into models to enhance their intelligence. With a 90% market share, it dominates this segment. However, the industry is shifting towards AI inference, where trained models generate responses in real time a market where Nvidia faces increasing competition.
The challenge? Inference computing can range from smartphones rewriting emails to data centers processing financial reports. Several startups and competitors, including AMD, are developing chips that promise lower energy consumption and cost efficiency, particularly as Nvidia’s chips demand enormous power, prompting some AI companies to explore nuclear energy solutions.
Bob Beachler, VP at Untether AI, one of 60+ startups trying to challenge Nvidia in inference, put it bluntly:
“They have a hammer, and they’re just making bigger hammers. They own the training market, and every new chip comes with that baggage.”
However, Nvidia argues that a new form of AI called "reasoning" will work in its favor. Reasoning-based AI chatbots analyze their own responses in real-time, requiring significantly more computing power something Nvidia’s chips excel at.
“The inference market will be many times larger than training,” said Jay Goldberg, CEO of D2D Advisory. “Nvidia’s market share may shrink, but the total revenue pool will grow exponentially.”
Beyond Chatbots: Quantum Computing & CPU Ambitions
Nvidia is also expected to tease advancements beyond AI chatbots, particularly in robotics and quantum computing.
In January, Huang’s comments suggesting quantum computing is still decades away sent shockwaves through the industry, causing stock drops for companies investing in the technology. This prompted Microsoft and Google to counter with claims that quantum breakthroughs are much closer. In response, Nvidia has dedicated an entire day at its conference to quantum computing and its future plans in the field.
Additionally, Nvidia is making moves into the PC processor market, with plans to develop its own central processing unit (CPU)—a move first reported by Reuters in January.
“This could take a bite out of what’s left of Intel’s market,” noted technology analyst Maribel Lopez.
With rising competition, shifting AI trends, and expansion into new computing markets, Nvidia’s developer conference will be a critical moment for Huang to reaffirm the company’s leadership and convince investors that its dominance is far from over.
