Jensen Huang Just Announced Bad News for Nvidia's Rivals

Nvidia (NASDAQ: NVDA) has dominated the artificial intelligence (AI) boom so far, thanks to the power of its graphics processing units (GPUs) and, more recently, its entire portfolio of AI products and services. GPUs are the chips driving key AI tasks, and Nvidia developed additional offerings to establish itself as the go-to place for AI.

The strategy has been the right one, keeping Nvidia on top and bringing in billions of dollars in earnings quarter after quarter. Revenue has reached record levels, with the chip designer reporting $130 billion for the latest fiscal year. Of course, Nvidia faces the challenge of competition, with other chip designers, even some of its customers, developing lower-cost AI chips. But Nvidia has managed to stay ahead thanks to the reputation it's built and its focus on innovation.

And now, on top of that, Nvidia CEO Jensen Huang just announced bad news for rivals.

Image source: Nvidia.

GPUs to train models

Before we dig in, though, a quick look at Nvidia's recent growth story. In the earlier days of AI development, Nvidia offered its GPUs to power this stage, helping train models on enormous amounts of data. These GPUs have been the fastest and most efficient around, making them extremely popular among customers aiming to win in the AI race. By using Nvidia GPUs, these customers save time and, therefore, can develop their platforms more quickly -- meaning they may start generating revenue from their AI projects more quickly, too.

Companies from Meta Platforms to Oracle have flocked to Nvidia for its latest chips, and these tech giants have the financial resources to continue investing in these high-performance products.

To keep all this going, Nvidia has pledged to update its top chips or even complete AI architecture on an annual basis. And so far, it has followed through on this, launching the Blackwell architecture last year and recently releasing Blackwell Ultra chips.

Of course, as mentioned, Nvidia faces the fact that rivals exist in the market, from Intel (NASDAQ: INTC) to Advanced Micro Devices and Broadcom -- and even Nvidia customers like Meta have created their own chips to use for some AI tasks. So far, this hasn't disrupted Nvidia's leadership. Now, news from Jensen Huang suggests Nvidia has taken another step ahead.

The bad news for rivals

Huang recently announced the following, which looks like bad news for the company's rivals: Nvidia is investing $5 billion in Intel stock in a move to collaborate with the leader in central processing units (CPUs), the main chips powering most computers. As part of the deal, Nvidia will incorporate Intel CPUs, specifically built for Nvidia, into its AI data center platforms. And Intel will include Nvidia GPU chiplets in its personal computing (PC) systems.

This strengthens Nvidia's AI capabilities as it offers the company access to top CPU technology. At the same time, it broadens Nvidia's presence in the PC market. So, Nvidia is scoring a double win through this deal with Intel. It also reinforces Nvidia's leadership in the AI market and makes Intel more of a partner than a rival. Clearly, this isn't bad news for Intel, which has struggled to take share in the AI market, but I wouldn't say the same thing concerning other rivals.

Nvidia's competition

Of course, this doesn't mean that competition has been eliminated. Others in the space have been advancing their technology and striking important deals; for example, AMD recently reached agreements with both Oracle and OpenAI for the deployment of its GPUs. Considering current and potential demand for compute, though, this can happen without putting Nvidia's leadership in jeopardy.

And Nvidia's partnership with Intel should further support Nvidia's position in this high-growth market. The overall AI market is expected to climb from the billions of dollars today to more than a trillion dollars a few years from now.

So, what does all this mean for investors? Huang's bad news for rivals doesn't mean they won't benefit from the AI chip market -- there's enough demand for many to succeed. But the news does suggest they won't unseat Nvidia any time soon, and that opens the door to ongoing strength for this AI leader well into the future.

Adria Cimino has positions in Oracle. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Meta Platforms, Nvidia, and Oracle. The Motley Fool recommends Broadcom and recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.