This article first appeared on GuruFocus.
Nvidia (NASDAQ:NVDA) has become the symbol of the AI era’s market mania, hitting a $5 trillion valuation and rewriting what investors thought was possible for a chipmaker. Since generative AI exploded into the mainstream, Nvidia’s dominance in data center GPUs has positioned it as the indispensable supplier of computing power for OpenAI, Microsoft, and Google. The company now projects around $500 billion in data center revenue over the next five quartersa figure that could stretch even the most bullish forecasts. Yet, some in the industry warn that the surge in AI infrastructure spending may be racing ahead of practical demand, raising the question of whether investors are financing another bubble or a genuine industrial revolution.
CEO Jensen Huang isn’t buying the bubble narrative. On a global campaign to court politicians and regulators, Huang has argued that the AI buildout remains in its early innings. Nvidia’s new Blackwell chipsits most powerful yetdeliver 2.5 times the performance of their predecessors and anchor the company’s GB200 superchip, which fuses two GPUs with one Grace CPU. These chips have become must-have assets for hyperscalers racing to train and deploy next-generation AI systems. But geopolitics continues to shadow Nvidia’s ascent. A recent $5.5 billion inventory writedown tied to Washington’s ban on the H20 chip for Chinese customers, followed by Beijing’s informal push against Nvidia products, shows how national security rivalries could weigh on the company’s access to one of its largest markets.
Competition, meanwhile, is heating up. Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) are both vying for relevance in a field Nvidia still dominates with roughly 90% of the data center GPU market. AMD has secured new supply deals with OpenAI and Oracle, while Intel has opted to partner with Nvidia on hybrid chips instead of going head-to-head. Even so, Nvidia’s relentless cadence of product launches and software integration could keep it ahead of the pack. For investors, the bet now is whether Nvidia’s breakneck momentum can translate into durable growthor if the AI gold rush that built its empire might soon test the limits of belief.
