NVIDIA's AI Factory Buildouts Double: Can Rivals Still Compete Now?

NVIDIA Corporation’s NVDA AI factory business is expanding rapidly and could help the company stay ahead of its rivals. In the first quarter of fiscal 2026, NVDA reported that nearly 100 NVIDIA-powered AI factories are currently in progress, twice the number from a year ago. Each factory is also using more graphics processing units (GPUs) than before, showing strong demand for large-scale AI compute infrastructure.

These AI factories use more than just NVIDIA chips. They also rely on NVIDIA’s networking tools (like NVLink and Spectrum-X), software platforms (such as CUDA and NeMo) and full-stack systems. This makes it harder for customers to switch to other providers. Hence, once customers choose NVIDIA, they often stay.

Governments and large enterprises across the world, including Saudi Arabia, Taiwan, the United Arab Emirates and the European Union, are working with NVIDIA to build sovereign AI infrastructure. Hyperscalers like Microsoft and Google are also expanding their use of NVIDIA’s full-stack systems.

Competitors may offer lower-cost hardware, but replicating NVIDIA’s end-to-end solution remains a challenge. With software optimization, ongoing performance improvements and strong developer support, NVIDIA continues to strengthen its grip on the AI infrastructure market.

In simple terms, NVIDIA is not just selling chips but building the foundation for the AI world with its networking and software tools. If this trend continues, it may become even harder for competitors to catch up.

Can Rivals Keep Up With NVIDIA’s AI Factory Push?

Two competitors, Advanced Micro Devices, Inc. AMD and Intel Corporation INTC, are also trying to grow in the AI infrastructure space, but they are far behind NVIDIA when it comes to AI factory buildouts.

Advanced Micro Devices is gaining attention with its Instinct MI300X chips, which are designed for large AI workloads. Some major cloud companies like Microsoft and Meta are testing AMD’s GPUs. However, Advanced Micro Devices does not yet offer a full-stack solution like NVIDIA. It lacks networking hardware and software tools at the same level as CUDA or NeMo.

Intel is promoting its Gaudi 3 AI chips as a low-cost option for training and inference. However, Intel’s AI ecosystem is still developing, and its overall AI market share remains small. It also does not offer a complete package that ties chips, software and networking together.

Both companies are making progress, but NVIDIA’s complete system gives it a strong lead.

NVIDIA’s Price Performance, Valuation and Estimates

Shares of NVIDIA have risen around 15.1% year to date against the Zacks Computer and Technology sector’s gain of 4.4%.

From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 32.25, higher than the sector’s average of 26.91.

The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 42.1% and 31.8%, respectively. The estimates for fiscal 2026 and fiscal 2027 have been revised upward in the past 30 days and seven days, respectively.

NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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