this is clogged
Nvidia's (NASDAQ: NVDA) valuation of around $3 trillion rests on key assumptions. The company's complete dominance in the artificial intelligence (AI) accelerator market is sustainable. Nvidia's market share is estimated at 95%, and while competitors like AMD and Intel are offering their own AI chips, they have made little headway against Nvidia's juggernaut.
Here's the problem: that assumption probably won't hold up in the long run. Nvidia has several key benefits, such as a mature software ecosystem and best-in-class hardware, but cracks are beginning to form. The biggest crack so far is Apple (NASDAQ: AAPL)'s decision to completely avoid Nvidia's GPUs while training the long-awaited Apple Intelligence platform.
No Nvidia, no problem
Apple is falling behind the generative AI party, but it's committed to bringing AI capabilities to iPhones, Macs, and other devices. Apple Intelligence, which will be in beta later this year, includes AI-powered writing tools, image creation features, an unembarrassing version of Siri, and other useful features. None of this is groundbreaking, but these features will be deeply integrated into Apple's ecosystem and made available to the company's large user base.
Apple has been training multiple AI models, including powerful server-based models that work in the cloud and more compact models that run directly on Apple devices. Training AI models is computationally intensive, and Nvidia's GPUs have been the standard choice since the AI boom began. Apple in particular took a different route.
Apple detailed the AI model that powers Apple Intelligence in a recent research paper, and the big surprise is that the tech giant has completely avoided Nvidia's GPUs. The server-based model was trained with Alphabet's Google 8,192 TPUv4 AI chips, while the on-device model was trained with a small number of TPUv5 AI chips.
Google has been designing custom AI chips for years. The company's 6th generation TPU, called Trillium, was announced in May. Google used custom chips to train its own AI model, and now Apple has chosen the same.
Apple's decision has killed arguments that Nvidia's GPUs are the only game in town for AI training.
Big risk to Nvidia's profits
The AI chip market is likely to grow fast enough for Nvidia's revenue to continue rising at a healthy pace even if it loses market share. However, it's hard to imagine Nvidia being able to maintain such high profit margins as competition steals dominance.
Nvidia reported 14.9 billion dollars in revenue of 26 billion dollars for the first quarter of fiscal year 2025, which ended on 4/28. It's very unlikely that Nvidia will be able to maintain a net profit margin of 50% or more in the long run. Competition will inevitably return the company's profitability to Earth.
AI inference, the act of using a trained AI model, does not necessarily require a powerful GPU. For example, Intel's latest Xeon server CPUs can run several inference workloads, and PCs equipped with dedicated AI chips are set to become standard. AI training requires strong accelerators, but Apple's choice to avoid Nvidia's GPUs is a strong sign that Nvidia's dominance in the AI training market is coming to an end.
Nvidia's AI growth story was incredible, but Apple dealt a serious blow to the AI king.
Consider this before you buy shares on Nvidia.
Motley Fool Stock Advisor's team of analysts have identified what they believe investors will buy now... and Nvidia wasn't one of them. The 10 stocks that have been cut could generate monster returns over the next few years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you would have $669,193! *
Equity advisors provide investors with an easy-to-understand blueprint for success, including guidance on building portfolios, regular updates from analysts, and 2 new stock picks every month. Stock advisor services have more than quadrupled S&P 500 returns since 2002*.
*Stock advisor returns as of 2024/7/29
Alphabet executive Suzanne Frey is a member of Motley Fool's board of directors. I have a position at Intel. The Motley Fool has positions in Advanced Micro Devices, Alphabet, Apple, and Nvidia, and recommends them. The Motley Fool recommends Intel and recommends the following options: The long 2025/1/45 call is to Intel, and the short 2024/8 call is to Intel. Motley Fool has A.
Originally published by The Motley Fool
Here's the problem: that assumption probably won't hold up in the long run. Nvidia has several key benefits, such as a mature software ecosystem and best-in-class hardware, but cracks are beginning to form. The biggest crack so far is Apple (NASDAQ: AAPL)'s decision to completely avoid Nvidia's GPUs while training the long-awaited Apple Intelligence platform.
No Nvidia, no problem
Apple is falling behind the generative AI party, but it's committed to bringing AI capabilities to iPhones, Macs, and other devices. Apple Intelligence, which will be in beta later this year, includes AI-powered writing tools, image creation features, an unembarrassing version of Siri, and other useful features. None of this is groundbreaking, but these features will be deeply integrated into Apple's ecosystem and made available to the company's large user base.
Apple has been training multiple AI models, including powerful server-based models that work in the cloud and more compact models that run directly on Apple devices. Training AI models is computationally intensive, and Nvidia's GPUs have been the standard choice since the AI boom began. Apple in particular took a different route.
Apple detailed the AI model that powers Apple Intelligence in a recent research paper, and the big surprise is that the tech giant has completely avoided Nvidia's GPUs. The server-based model was trained with Alphabet's Google 8,192 TPUv4 AI chips, while the on-device model was trained with a small number of TPUv5 AI chips.
Google has been designing custom AI chips for years. The company's 6th generation TPU, called Trillium, was announced in May. Google used custom chips to train its own AI model, and now Apple has chosen the same.
Apple's decision has killed arguments that Nvidia's GPUs are the only game in town for AI training.
Big risk to Nvidia's profits
The AI chip market is likely to grow fast enough for Nvidia's revenue to continue rising at a healthy pace even if it loses market share. However, it's hard to imagine Nvidia being able to maintain such high profit margins as competition steals dominance.
Nvidia reported 14.9 billion dollars in revenue of 26 billion dollars for the first quarter of fiscal year 2025, which ended on 4/28. It's very unlikely that Nvidia will be able to maintain a net profit margin of 50% or more in the long run. Competition will inevitably return the company's profitability to Earth.
AI inference, the act of using a trained AI model, does not necessarily require a powerful GPU. For example, Intel's latest Xeon server CPUs can run several inference workloads, and PCs equipped with dedicated AI chips are set to become standard. AI training requires strong accelerators, but Apple's choice to avoid Nvidia's GPUs is a strong sign that Nvidia's dominance in the AI training market is coming to an end.
Nvidia's AI growth story was incredible, but Apple dealt a serious blow to the AI king.
Consider this before you buy shares on Nvidia.
Motley Fool Stock Advisor's team of analysts have identified what they believe investors will buy now... and Nvidia wasn't one of them. The 10 stocks that have been cut could generate monster returns over the next few years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you would have $669,193! *
Equity advisors provide investors with an easy-to-understand blueprint for success, including guidance on building portfolios, regular updates from analysts, and 2 new stock picks every month. Stock advisor services have more than quadrupled S&P 500 returns since 2002*.
*Stock advisor returns as of 2024/7/29
Alphabet executive Suzanne Frey is a member of Motley Fool's board of directors. I have a position at Intel. The Motley Fool has positions in Advanced Micro Devices, Alphabet, Apple, and Nvidia, and recommends them. The Motley Fool recommends Intel and recommends the following options: The long 2025/1/45 call is to Intel, and the short 2024/8 call is to Intel. Motley Fool has A.
Originally published by The Motley Fool
ahhh. The semiconductor, high-tech, and AI brands will end next week![]()
The restart is confirmed.
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まだまだ経験浅い素人です。冷静を心掛けてマイルールを守って粛々と目標に向かって投資。ナースマンです行動心理学得意です。
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