Dan Niles Explains Why He Turned Bullish on NVIDIA (NVDA)

Nvidia is one of the 10 Buzzing Stocks Everyone is Talking About.

Dan Niles, Niles Investment Management founder and portfolio manager, said in a recent program on CNBC that he turned bullish on NVIDIA Corp (NASDAQ:NVDA) for two reasons. The first was the company’s China write-down after the US government imposed new restrictions on AI chip sales. The second was related to the core dynamics of the AI industry fueling demand:

“So training spending is slowing down, but you finally had inference spending picking up. And so that means people are going to ChatGPT, OpenAI, Gemini, which is the one I use a lot. I probably use it 10 to 20 times a day. And you had inference demand really start to take off. Google talked about the fact that in the month of May, the tokens that they were generating were up 50 times year-over-year. And then Microsoft, which obviously was invested in OpenAI back in 2019 before any of us had even heard of ChatGPT in 2022, they came out and said, “Hey, we have a 5x increase in the number of tokens we’re generating. And so you put all that together, companies forecast derisks because of that massive write-down, some of the sovereign AI demand as President Trump went to the Middle East and you had all these deals, all of that stuff.”

NVDA is back in the game as even its skeptics are turning bullish amid strong demand for its chips. But Nvidia could face tough competition in the future. Major competitors like Apple, Qualcomm, and AMD are vying for TSMC’s 3nm capacity, which could limit Nvidia's access to these chips. Why? Because Nvidia also uses  TSMC's 3nm process nodes. Nvidia is also facing direct competition from other giants that are deciding to make their own chips. Amazon, with its Trainium2 AI chips, offers alternatives. Trainium2 chips could provide cost savings and superior computational power, which could shift AI workloads away from Nvidia’s offerings.

Mar Vista Global Quality Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2025 investor letter:

“NVIDIA Corporation (NASDAQ:NVDA) shares rebounded from their calendar Q1 lows as investor concerns over DeepSeek’s efficiency gains and U.S. government restrictions on advanced AI semiconductors, such as NVIDIA’s H20 family of GPUs, proved overstated. Demand for NVIDIA’s next-generation Blackwell platform remains strong, fueled by the growing complexity of large language models and the emergence of reasoning-based applications. As CEO Jensen Huang noted, reasoning tasks can require up to 10 times the compute power of training a conventional large language model. With the AI market still in the early stages of a multi-year infrastructure build-out, NVIDIA is well-positioned to capture significant value as the industry standard for accelerated computing.”

While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.